Recent FASB Updates Related to CECL

Implementing CECL has brought about a host of accounting and other technical questions. The Financial Accounting Standards Board (FASB) works with the industry through a series of meetings to identify these questions, evaluate industry feedback, and periodically issue clarifying statements. We will continuously publish summarized points of interest from these meetings as they arise.

FASB Board Meeting: September 6, 2017


The FASB’s board meeting on September 6, 2017, discussed issues related to troubled debt restructurings (TDRs) that were not resolved during the Transition Resource Group (TRG) meeting1 in June. The September board meeting concluded on bank responsibilities related to the following:

  1. TDR Identification – When a loan is individually identified as a reasonably expected TDR, all effects of the TDR should be recognized in the allowance for loan loss.
  2. TDR Measurement – At the point at which an individual loan is specifically identified as a reasonably expected TDR, an entity must use a Discounted Cash Flow (DCF) method if the TDR involves a concession that can be captured using only a DCF method (or reconcilable method).

 

TRG Meeting: June 12, 2017

During its meeting on June 12, 2017, the TRG discussed the following topics relative to Credit Losses: 

  1. Discounting expected cashflows at the effective interest rate
  2. Scope of purchased credit deteriorated (PCD) assets for beneficial interests
  3. Transition guidance for PCD assets
  4. Accounting for troubled debt restructurings (TDRs) – addressed at September 6, 2017, board meeting
  5. Determining the estimated life of a credit card receivable

We will continue monitoring these topics.


All information reported and summarized here is from the FASB website at www.fasb.org.  Some items are reported verbatim to maintain the integrity of the FASB statement.

[1] The Credit Loss Transition Resource Group consists of 16 industry experts who meet periodically and whose purpose is to solicit, analyze, and discuss stakeholder issues arising from implementation of new guidance. TRG does not issue guidance. Only FASB issues guidance.