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Loan loss allowance for specialty lenders is a key due diligence issue

FINANCIAL REPORTING INSIGHTS  | 

We have issued an updated version of our white paper, Allowance for loan losses is a key due diligence issue, which continues to have an overall focus on the loan loss allowance for specialty finance lenders being a key due diligence issue for private equity groups and other strategic investors that have invested in, or are interested in investing in, the specialty finance industry. In addition to discussing the legacy loan loss accounting guidance for homogenous loans and individually evaluated loans, the updated white paper now also includes discussion of the new credit losses accounting guidance for loans measured at amortized cost. Central to this discussion is the current expected credit losses (CECL) model, including examples of methods that may be used, requirements that must be met when applying a method, and the judgments that may be necessary in estimating an allowance for credit losses using the CECL model. The updated white paper also includes information about the effective dates for the new credit losses guidance.

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