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FASB Issues Narrow Proposal for Credit Losses Standard

The Financial Accounting Standards Board (“FASB”) has released a proposal aimed to help banking institutions implement Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Narrow in scope, the proposed amendment would ease the transition to the credit losses standard by allowing the fair value measurement of certain bank assets. Proposed ASU No. 2019-100, Targeted Transition Relief for Topic 326, Financial Instruments—Credit Losses, would permit banks to irrevocably elect the fair value option on an instrument-by-instrument basis for qualified financial assets that are measured at amortized cost when they adopt ASU No.. Read More.

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Banks Clash over FASB’s Credit Losses Proposal

Supporters of a proposal to change a key part of the Financial Accounting Standards Board’s (“FASB”) credit losses standard attempted to make progress at the board’s recent public roundtable. Held at the FASB’s headquarters, the roundtable served as an opportunity to strengthen banker support for the proposed change on Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Despite the efforts, however, the roundtable discussion exposed the divide among bankers concerning whether and how the FASB should amend its standard. Representatives from mid-sized banks called for tweaks to ASU No.. Read More.

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AICPA Issues Guidance for Implementing Credit Losses Standard

The American Institute of Certified Public Accountants (“AICPA”) has issued a new Audit and Accounting Guide to help banking institutions and insurers implement the Financial Accounting Standards Board’s credit losses standard. Published last week, the guidance highlights key requirements of Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. It also describes the Financial Reporting Executive Committee’s (“FinREC”) understanding of customary or sole industry practice regarding certain issues. The guide notes FinREC prefers another practice outside of the customary or sole industry practice. The AICPA said the guide will address implementation issues its. Read More.

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FASB Issues Guidance on Applying Credit Loss Standard

The Financial Accounting Standards Board’s (“FASB”) research staff has issued a question-and-answer document to assist with applying Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The informal guidance offers ways smaller banking institutions can calculate their expected losses on bad loans. Most of the guidance covers questions the board has recently addressed whether the weighted average remaining maturity (“WARM”) method is permitted under the credit loss standard. The FASB says smaller banks can apply the practical method to estimate loan losses, but the guidance also restates the flexibility of the standard,. Read More.

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SEC Chairman Says FASB Should Decide on Credit Loss Standard Delay

With pressure mounting for the Financial Accounting Standards Board (“FASB”) to postpone implementation of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, Securities and Exchange Commission (“SEC”) chairman Jay Clayton is tiptoeing around the prospects of a delay. Talking to reporters at a recent conference, Clayton said while his agency oversees standard-setting organizations, it is ultimately up to the FASB to decide whether delaying the credit loss standard is necessary. His remarks come as banks and trade groups have asked for more time to implement ASU No. 2016-13 . Banking groups like the Mortgage Bankers Association and the Bank Policy Institute are concerned over the costs to comply with the standard.. Read More.

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Mortgage Bankers Association Wants a Delay in Credit Losses Standard

Another banking group wants the Financial Stability Oversight Council (“FSOC”) to postpone the effective date of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. In a letter last month, the Mortgage Bankers Association (“MBA”) urged the FSOC to complete a quantitative impact study to examine the effects of the Financial Accounting Standards Board’s (“FASB”) credit losses standard. The MBA considers the study critical to helping banking agencies, banks, and others understand the standard’s full impact and any unanticipated effects. Echoing concerns from the Bank Policy Institute , the MBA says the credit losses standard. Read More.

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