Featured Product

    US Agencies Publish FAQs on Accounting Standard on Credit Losses

    US Agencies (FED, FDIC, NCUA, and OCC) issued frequently asked questions (FAQs) on the new accounting standard for credit losses, in an effort to assist institutions and examiners. The FAQs focus on the application of the current expected credit losses methodology (CECL) for estimating credit loss allowances and related supervisory expectations and regulatory reporting guidance. The periodic issuance and updating of the FAQs is part of the efforts by the US Agencies to support institutions as they prepare to implement CECL.

    The FAQ document also includes the questions and answers issued in September 2017 and December 2016. US Agencies published nine additional questions, updated responses to four existing questions, and added an appendix with links to relevant resources that are available to banks for help with the implementation of CECL. The nine additional FAQs cover the following topics:

    • Consideration of stress testing models, scenarios, and forecast periods when forecasting future economic conditions for CECL
    • Accounting implementation issues related to expected future changes in collateral when using the collateral-dependent practical expedient and related to the borrower payment behaviors as a risk characteristic for credit card portfolios
    • Internal control considerations for CECL implementation
    • Clarification of US Agencies’ use of the term “smaller and less complex” related to the scalability of CECL
    • Concepts in existing interagency policy statements related to the allowance for loan and lease losses that remain relevant

    The four updated responses pertain to the existing questions 4, 18, 34, and 35. The updated responses reflect the new effective date for nonpublic business entities as announced in the FASB Accounting Standard Update 2018-19, titled “Codification Improvements to Topic 326, Financial InstrumentsCredit Losses” and issued in November 2018; the updated responses also reflect the final rule that modifies regulatory capital rules. The new standard takes effect in 2020, 2021, or 2022, depending on the characteristics of an institution. 

     

    Related Links

    Keywords: Americas, US, Banking, Accounting, CECL, IFRS 9, FAQ, Credit Risk, Financial Instruments, US Agencies

     

    Featured Experts
    Related Articles
    News

    EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package

    EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.

    February 26, 2021 WebPage Regulatory News
    News

    EU Committee Recommends Systemic Risk Buffer of 4.5% in Norway

    The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.

    February 25, 2021 WebPage Regulatory News
    News

    PRA Clarifies Approach to Onshoring of Credit Risk Rules for UK Banks

    In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.

    February 25, 2021 WebPage Regulatory News
    News

    FSB Sets Out Work Priorities for 2021

    In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.

    February 25, 2021 WebPage Regulatory News
    News

    EU Publishes Corrigendum to Revised Capital Requirements Regulation

    EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).

    February 25, 2021 WebPage Regulatory News
    News

    ESAs Issue Statement on Application of Sustainability Disclosures Rule

    ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).

    February 25, 2021 WebPage Regulatory News
    News

    EC Consults on Crisis Management and Deposit Insurance Frameworks

    EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.

    February 25, 2021 WebPage Regulatory News
    News

    HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs

    HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.

    February 24, 2021 WebPage Regulatory News
    News

    EBA Proposes Standards for Supervisory Cooperation Under IFD

    EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.

    February 24, 2021 WebPage Regulatory News
    News

    BoE Addresses Banks in Scope of First Resolvability Assessment

    BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.

    February 24, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6629