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FASB to Review Credit Loss Standard Alternative for Regional Banks

In response to requests for a different method for calculating loan losses under Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, the Financial Accounting Standards Board (“FASB”) plans to determine whether to undertake a limited-scope standard-setting project for regional banks. At the board’s April 3 meeting, FASB staff will present its research on the proposed alternative approach. Board members will take up the issue, reject the alternative, or conduct more research. The decision to discuss the alternative comes after a November 2018 letter from over 20 regional banks asking the FASB to consider an alternative. During a January. 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 Publishes Landmark Credit Loss Standard

The Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . Published on June 16, the amendments represent the most significant change to the FASB’s guidance for writing down bad loans and securities. The updated guidance has also been added to U.S. GAAP under Topic 326, Financial Instruments—Credit Losses. This ASU removes the “probable” requirement for recognition of credit losses. The 2008 financial crisis was frequently blamed for delayed recognition of impaired loans. The new current expected credit loss (CECL) model allows entities to recognize the full amount of credit losses that are expected based on both historical and forward looking information.. Read More.

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FASB Credit Loss Standard to be Issued Thursday

The Financial Accounting Standards Board’s (“FASB”) long-anticipated guidance in response to the 2008 financial crisis is scheduled for a Thursday release. The accounting board’s final standard for writing down bad loans and securities will be issued as Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326), and listed under U.S. GAAP as Topic 326, Financial Instruments — Credit Losses. Barring any changes, public companies must implement the new amendments beginning in 2020.

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