The Financial Accounting Standards Board has released a proposal for comment to improve reporting on expected credit losses on loans and other financial assets held as investments by banks, financial institutions and other public and private organizations.

The new accounting model in Proposed Accounting Standards Update, Financial Instruments — Credit Losses 9 (Subtopic 825-15), aims to require more timely recognition of credit losses, as well as additional transparency about credit risk. It would use a single “expected credit loss” measurement for recognizing credit losses, in place of the multiple current models in U.S. GAAP, which generally require that a loss be “incurred” before it is recognized.

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