CECL

Bankers preparing for the Financial Accounting Standards Board’s new current expected credit loss model have many questions about implementation.

The Financial Accounting Standards Board released a proposed accounting standards update Monday to amend the transition requirements and scope of the credit losses standard that it issued in 2016.

The American Institute of CPAs’ Financial Reporting Executive Committee, also known as FinREC, has posted a pair of working drafts on how accountants can deal with two issues related to the Current Expected Credit Loss standard that will be taking effect at the end of next year.

The rollback of Dodd-Frank requirements may have an impact on the credit loss standard.

The Financial Accounting Standards Board is proposing to modify the effective date of its Current Expected Credit Losses standard for nonpublic companies, giving many private banks and credit unions an extra year to get ready for the new rules.

KPMG is partnering with analytics provider SAS on helping banks make the transition to the current expected credit loss, or CECL, accounting standard that begins to take effect in January 2020.

Accountants serving U.S. banks and credit unions are bracing for the impact that the current expected credit loss model may have on the institutions’ allowance for loan and lease losses and capital levels, and these institutions are enacting transition plans now.

Bank regulators propose to allow banks to phase in capital treatment of credit losses over three years.

Larry Smith, who served as a member of the Financial Accounting Standards Board from 2007 until 2017, is watching some of the standards he worked on for a decade now being rolled out, but he believes the board should be doing more on performance reporting and the FASB Accounting Standards Codification.