FinREC issues credit loss standard working drafts

By Ken Tysiac

The AICPA Financial Reporting Executive Committee (FinREC) issued working drafts of accounting issues related to FASB’s new credit losses standard.

Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, established a new current expected credit loss, or CECL, model that is designed to make accounting for credit losses more forward-looking.

The AICPA is publishing a guide that will help financial statement preparers implement the new standard, which represents one of the most significant changes to financial institution accounting in 40 years. The working drafts issued by FinREC will appear in the guide when it’s published.

The drafts propose helpful considerations for depository and lending institutions and insurance companies and consist of:

  • Issue No. 21: Advances of Taxes and Insurance.
  • Issue No. 23: Zero Expected Credit Losses Factors for Financial Assets Secured by Collateral.
  • Issue No. 28: Scope Exception for Loans and Receivables Between Entities Under Common Control.

Informal feedback can be submitted to Jason Brodmerkel at Jason.Brodmerkel@aicpa-cima.com by Oct. 15.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

SPONSORED QUIZ

How well do you know small business?

There are over 30 million small businesses in the U.S., and many of them are optimistic in their outlook. Are you familiar with the obstacles and opportunities they are facing? Test your small business acumen with this quiz sponsored by Chase Ink®.

SPONSORED REPORT

In focus: Payroll

Providing payroll services that comply with ever-changing regulations and meet evolving employee and employer demands is no easy task. Paychex's Tom Hammond discusses common payroll considerations for CPA firms.