FASB Proposes Change to Help Banks Adjust to Credit Loss Standard
The Financial Accounting Standards Board (FASB) recently released a proposed accounting standards update to adjust the transition requirements and scope of the Current Expected Credit Losses (CECL) standard.
The proposal would require private entities to implement it for fiscal years starting after December 15, 2021, including interim periods within those fiscal years. The change would align the implementation date for their interim financial statements. These proposed changes have the potential to help private banks and credit unions deal with the transition on a more comfortable timeline. Publicly traded companies that are SEC filers should implement the standard for fiscal years beginning after December 15, 2019, and for public companies that aren’t SEC filers after December 15, 2020.
This change will give private banks and credit unions more time to adjust to the credit loss standard than publicly traded companies, much like the new revenue recognition and lease accounting standards.
The proposed update also clarifies that receivables arising from operating leases are not within the scope of the credit losses standard and should instead be accounted for in accordance with the lease accounting standard.
If you have questions on how these proposed changes to the credit loss standard may impact your organization, please contact Lincoln Gray, Partner and Financial Services Industry Group Leader, at firstname.lastname@example.org or 314.983.1235.