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.
Keywords: Americas, US, Accounting, Banking, CECL, Credit Risk, IFRS 9, Disclosures, Topic 815, Derivatives and Hedging, FASB
Previous ArticleFDIC Approves Proposal to Amend Swap Margin Rule
Next ArticleBoM Revises Guideline on Credit Concentration Risk
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.
The Federal Financial Supervisory Authority of Germany (BaFin) proposed to amend the “Capital Investment Conduct And Organization Ordinance” and issued a draft circular on the minimum resolvability requirements for resolution planning.
The European Banking Authority (EBA) proposed guidelines, for the resolution authorities, on the publication of the write-down and conversion and bail-in exchange mechanic, with the comment period ending on September 07, 2022.
The Financial Services Authority of Indonesia (OJK) is strengthening cooperation with the Australian Prudential Regulation Authority (APRA) and the Japanese Financial Services Agency (JFSA)
The European Parliament and the Council published Regulation 2022/868 on European data governance (Data Governance Act).
The European Banking Authority (EBA) published phase 2 of its reporting framework 3.2. The technical package supports the implementation of the updated reporting framework by providing standard specifications