FASB to Conduct Post-Implementation Review of CECL Standard
FASB announced the launch of its new Post-Implementation Review (PIR) web portal. The web portal contains information on the post-implementation review projects, providing an overview of the actions taken to date as well as the plan for future activities. The current post-implementation review projects are on credit losses, leases, and revenue recognition. In the three-stage post-implementation review process activity plan for the credit losses project, Stage 1 involves activities related to the post-issuance-date implementation monitoring and Stage 2 involves post-effective-date evaluation of costs and benefits. Among other activities, the staff will host a roundtable in the first half of 2021 to discuss the implementation of Topic 326. In the final and third stage of the plan, the Boards will discuss the results of their research and prepare a final report for the Standard-Setting Process Oversight Committee.
The post-implementation review process is an important quality control mechanism built into standard-setting process of FASB that begins after a standard is issued. During the process, FASB solicits and considers diverse stakeholder input and other research to evaluate whether a standard is achieving its objective to provide financial statement users with relevant information in ways that justify the cost of providing it. This will allow FASB to identify and address any areas for improvement arising from either adoption or implementation. Depending on the outcome of the evaluation, FASB may decide to take action to address one or more of the following:
- Areas of the standard that are not understandable
- Unintended consequences that were not foreseen during development of the standard
- Unexpected costs (one time or ongoing) based on the actual results observed, in comparison with the expectations documented in the Board's basis for conclusions
As with all standard-setting activities, actions resulting from a post-implementation review are subject to the normal due process of the Board.
Related Links
- Press Release
- Plan for Review of Credit Losses Standard (PDF)
- Post-Implementation Review Portal
- Post-Implementation Review Process
Keywords: Americas, US, Banking, Insurance, Post-Implementation Review, CECL, Financial Instruments, Topic 326, Credit Risk, FASB
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