Four U.S. regulatory agencies—the FRB, the FDIC, the NCUA and the OCC—have issued a set of FAQs to assist financial institutions with implementing the FASB’s new accounting standard. The FASB standard introduces the current expected credit loss (CECL) methodology for estimating allowances for credit losses under U.S. generally accepted accounting principles (U.S. GAAP), and many firms are grappling with how to implement it.
Aside from reiterating the reasons behind the need for the new standard, the FAQs highlight some key areas that firms need to take notice of regarding the new CECL standard and how it affects GAAP. Although it’s several years away, organizations need to begin the planning process now in order to meet the expected deadline.