In This Section
- FASB Webcasts and Documents
- FASB Update: Measurement of Credit Losses on Financial Instruments (June 2016)
- FASB Meeting Agenda and Materials on CECL and Alternatives (January 2019)
- AICPA Presentation on CECL Implementation
- FDIC Presentation on CECL for Smaller, Less Complex Institutions
- OCC Final Rule on Implementation of CECL
FASB is urged to take into consideration the impact of CECL implementation on lenders.
Overview: In June 2016, the Financial Accounting Standards Board (FASB) issued a new accounting standard governing the way companies will evaluate and account for impaired loans and securities. The new standard, ASU 2016-13, replaces the current incurred loss model for calculating the allowance for loan and credit losses with an expected loss model. As the name suggests, CECL will require companies to take long forward-looking approach when establishing reserves for loan and credit losses. The CECL standard is effective for SEC registrants in 2020, and for all other companies in 2021. Early adoption of the standard is permitted beginning in 2019. CECL probably represents one of the most significant rewrites of U.S. GAAP in the past 40 years, and once implemented, will fundamentally change how banks and other financial companies recognize credit losses in their loan and held-to-maturity debt security portfolios.