New credit losses standard in a nutshell
WHITE PAPER |
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced a new model for determining the allowance for credit losses known as CECL (current expected credit loss). While the new guidance is not effective for a few years, certain things should be focused on now given that it impacts nearly all entities and is believed to be the most significant fundamental accounting change financial institutions and other lenders have ever faced.
In our summary, New credit losses standard in a nutshell, we answer the following key questions:
- What do I need to know about the new standard on credit losses?
- When will the new standard be effective?
- What should management do now to prepare?
- What are the key aspects our governing body should focus on?
For additional information about the new credit losses standard refer to our high-level summary, FASB issues final standard on credit losses, and in-depth white paper, Financial instruments: In-depth analysis of new standard on credit losses.