Get ready to fire up those credit-loss prediction models.
The Financial Accounting Standards Board has issued a proposed accounting standards update that will require companies to predict credit losses and book higher reserves, if needed, even before cash flow and earnings actually begin to suffer.
The proposal, which applies to all companies but will hit financial firms the hardest, would move U.S. Generally Accepted Accounting Principles away from the current approach that requires companies to book credit losses as they occur or seem imminent, toward a greater reliance on forecasting to book losses long before they actually happen.
As the ...