United States

SEC Staff Accounting Bulletin No. 119


On November 19, 2019, the SEC issued Staff Accounting Bulletin (SAB) No. 119 to update the staff’s guidance and formally address the adoption of Financial Accounting Standards Board Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL). SAB No. 119 adds Section M to Topic 6 of the SAB Series, which will replace existing Section L on the date of adoption by the SEC filer.

SAB No. 119 includes staff interpretations regarding considerations, policies and procedures for developing CECL models, the governance structure, documentation requirements, model validation, and internal controls. Although SAB No. 119 applies to registrants that are creditors in loan transactions, the content may be useful to all entities adopting CECL, including nonpublic companies and entities other than financial institutions that have financial assets subject to the provisions of ASU 2016-13.

The statements in SABs are not rules or interpretations of the SEC, nor are they published as bearing the SEC’s official approval. They represent staff interpretations and practices followed by the staff in the Division of Corporation Finance and the Office of the Chief Accountant in administering the disclosure requirements of the federal securities laws.

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