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FASB to Address Troubled Debt Restructurings for Credit Loss Standard

Happening early next month is a discussion on the Financial Accounting Standards Board’s (“FASB”) new banking requirements for calculating losses on bad loans. The discussion on Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, is expected to clarify how banks and auditors should account for troubled debt restructurings. At the heart of ASU No. 2016-13, which is considered the FASB’s main response to the 2008 financial crisis, is estimating credit losses. One interpretation of the standard suggests troubled debt restructurings to be assessed on a portfolio basis, but. Read More.

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Bank Regulators Issue Interpretive Guidance for Credit Loss Standard

Interpretative guidance has been published describing the scope of Accounting Standards Update (ASU) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Issued by federal banking regulators in a frequently asked questions format, the document explains the reasons for the Financial Accounting Standards Board (“FASB”) credit loss standard, the accounting changes, and how banks’ write-down practices should be modified. ASU No. 2016-13 was issued in June and applies to any banking institutions that file regulatory reports wherein the reporting requirements follow U.S. GAAP. The standard will be effective for public companies in 2020;. Read More.

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Comment Letters Ask FASB to Limit Future Projects

Some trade groups want the Financial Accounting Standards Board (“FASB”) to provide more leeway for implementing current accounting standards before taking on new projects. In feedback to the FASB’s Invitation to Comment, Agenda Consultation, groups like the American Bankers Association (“ABA”) asked the board to consider the time and costs needed when new standards are implemented. The ABA also noted that standards involving revenue, leases, credit losses and financial instrument measurement and classification require significant undertaking that could last over several years. Other comment letters to the agenda consultation document came from the Institute of Management Accountants (“IMA”), which advised. Read More.

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FASB to Create Advisory Panel for Adoption of Asset Impairment Standard

Expected to issue its standard for recording loan losses next year, the Financial Accounting Standards Board (“FASB”) is creating an advisory panel to assist companies in the implementation of Proposed Accounting Standards Update No. 2012-260, Financial Instruments—Credit Losses (Subtopic 825-15). Responding to investors’ complaints about banks using the incurred-loss model for reporting losses during the global financial crisis, the standard will help disclose bad loans and securities, as well as adopt a current-expected-credit-loss (CECL) model. The new model will require banks to evaluate forthcoming losses on loans going bad and establish reserves based on such estimates. Commenting on the advisory. Read More.

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FASB Announces Topics for September 3rd Board Meeting

Prepping for its board meeting Wednesday, the Financial Accounting Standards Board (“FASB”) has announced the three topics it will cover: Financial instruments—impairment. FASB will continue to discuss Proposed Accounting Standards Update, Financial Instruments—Credit Losses (Subtopic 825-15). The discussion will focus on write-off guidance and clarifying the term which an entity should estimate its projected credit losses for financial instruments. Disclosure framework: disclosure review—fair value measurement. FASB plans to cover application to fair value disclosures of the concepts in the proposed FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements. While no decisions are anticipated from the discussion, prospective. Read More.

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FASB Announces Itinerary for Wednesday’s Meeting

Scheduled for Wednesday, the Financial Accounting Standards Board (“FASB”) meeting will cover four topics essential to the standard-setter’s ongoing efforts: 1.  Agenda prioritization. FASB plans to review staff research and analysis from a number of prospective projects and which ones will be added to its agenda. 2.  Financial instruments— impairment . Discussions will continue on FASB’s Proposed Accounting Standards Update, Financial Instruments-Credit Losses. In particular, the conversation will focus on impairment guidance for debt securities and clarifying the measurement principle in the Current Expected Credit Losses model. 3.  Insurance— disclosures concerning short-duration contracts . Talks will continue on disclosures on short duration contracts, including disclosures. Read More.

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