Industry Insights

CECL Effective Date Extended & New Disclosure Relief

April 2016
Author:  Anne Coughlan

Anne Coughlan



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The Financial Accounting Standards Board (FASB) met April 27, 2016, for a vote approving the issuance of a final Accounting Standards Update that will overhaul credit impairment guidance.  The 5-to-2 vote marks the beginning of the end of an arduous and controversial five-year project.  The final standard on the Current Expected Credit Loss (CECL) model is expected to be released on or before June 30, 2016.

FASB also voted to extend the mandatory effective dates for all entities due to the repeated delays in the standard’s release.  The new guidance will be effective for public business entities (PBE) that are SEC filers for fiscal years beginning after December 15, 2019, including interim periods, i.e., 2020 for calendar year-end companies.  The effective date for PBEs that aren’t SEC filers would be fiscal years beginning after December 15, 2020, including interim periods.  For all other entities, the new guidance would be effective for fiscal years beginning after December 15, 2020, and for interim financial statements for fiscal years beginning after December 15, 2021.  For entities already planning for implementation, early adoption will be permitted as of the previously released date for SEC filers, as noted in the table below.

FASB considered feedback from the April transition resource group meeting related to the disclosure of credit quality indicators by year of origination.  Credit union and community bank representatives explained preparation costs would exceed any benefit to their financial statement users.  They noted their shareholders typically aren’t institutional investors and either have a close relationship with bank management or are credit union members.  FASB agreed, and the disclosure won’t be required for entities that aren’t public business entities.  For public business entities that aren’t SEC filers, transitional relief will allow banks to “build up” the data over time to meet the full disclosure requirements.

BKD continues to monitor this project.  Visit BKD’s Hot Topics page to learn more.

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