In the midst of sudden changes in global health and economic conditions, accounting standards are making headlines. Within the past week, there have been two very different stances taken relating to accounting for current expected credit losses (CECL) under ASU 2016-13 and for troubled debt restructurings under U.S. GAAP.
On March 19, Chairman of the Federal Deposit Insurance Corporation Jelena McWilliams sent a letter to the Financial Accounting Standards Board (FASB) urging it to take actions to delay financial institutions’ transition to the new CECL model. This included giving financial institutions subject to ASU 2016-13 the option to postpone implementation and delaying the effective date for financial institutions not yet required to implement CECL. She is also seeking loan modifications resulting from the coronavirus pandemic to be excluded as concessions in determining whether there has been a troubled debt restructuring (TDR).
