FASB Publishes Summary of CECL Related Discussions at Its Meeting
FASB met in the first week of April to discuss issues related to the current expected credit loss (CECL) standard and took two key decisions. The Board decided that the proposed alternative submitted by a group of regional banks on November 05, 2018, and their follow-up letter, which was submitted on January 11, 2019, would not result in incremental improvements to the accounting for expected credit losses. The Board also decided that an entity is not required to disclose gross write-offs and gross recoveries by vintage.
On November 05, 2018, a group of 20 U.S.-based regional banks and an industry trade group had submitted a proposal to FASB. The proposal recommended an alternative approach to presenting the provision for expected credit losses in the financial statements. The proposal sought to bifurcate expected credit losses for performing loans by presenting the first 12 months of expected credit losses in the net income as a provision expense while presenting credit losses expected to occur beyond the first 12 months in other comprehensive income. For impaired loans, an entity would record the full amount of expected credit losses in the income statement as a provision expense. However, the Board rejected this request 21 regional banks to consider changing the way the impact of CECL would be recorded in financial statements.
In addition to deciding that an entity is not required to disclose gross write-offs and gross recoveries by vintage, the Board directed the staff to conduct additional outreach and research on the costs and benefits of disclosing gross write-offs and gross recoveries in the vintage disclosure table. Other topics of discussion included consequential and technical corrections for convertible instruments and for the derivatives scope exception under the Topic 815 on Derivatives and Hedging.
Related Links
Keywords: Americas, US, Accounting, Banking, CECL, Credit Risk, IFRS 9, Disclosures, Topic 815, Derivatives and Hedging, FASB
Featured Experts
Scott Dietz
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
Emil Lopez
Credit risk modeling advisor; IFRS 9 researcher; data quality and risk reporting manager
Masha Muzyka
CECL, IFRS 9, and IFRS 17 expert; credit risk and insurance risk specialist; strategic planning and credit analytics solutions consultant
Previous Article
IAIS Publishes Newsletter for September 2019Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
