Without yet addressing calls for a delay or big changes to the pending new rules on credit losses, the Financial Accounting Standards Board has decided to follow the advice of an advisory group and make some amendments to the standard.

During a regularly scheduled session, FASB reviewed recommendations from its Credit Losses Transition Resources Group to make amendments to Accounting Standards Codification Topic 326 on credit losses, which requires companies to adopt a “current expected credit losses” model to project and report trouble in debt portfolios beginning Jan. 1, 2020.

The board said it will make some changes to the guidance around recoveries, negative allowances, vintage disclosures, and contractual extensions, but it will not amend guidance on the role of discounting when using a method other than a discounted cash flow method. FASB directed its staff to draft accounting standards updates that will be exposed for public comment.

With respect to recoveries, FASB reversed an August decision that would limit recoveries to amounts from the borrower in the allowance for credit losses, choosing instead to reaffirm an earlier decision that an entity should be required to include recoveries in determining the allowance for credit losses. FASB says it plans to permit entities to record a negative allowance on financial assets as long as it does not exceed the total amount of previous or expected write-offs. Regarding contractual extensions, the board plans to require an entity to evaluate extension or renewal options, except those accounted for as derivatives, that are included in the original or modified contract and are not unconditionally cancellable.

Questions around vintage disclosures proved a little trickier for the board to navigate. Ultimately, the board decided it will clarify the language in ASC 326 that gross recoveries and gross write-offs should be presented by vintage year and class of financing receivables within the currently required credit quality information vintage disclosures. With respect to line-of-credit arrangements that convert to term loans, the board determined companies should be required to disclose amounts that are converted by original year under certain circumstances.

FASB is facing pressure from the financial services sector and even a handful of Congress members to delay the effective date of the CECL standard until its effect on the broader economy can be studied. Banks have become concerned as they are testing and preparing parallel runs of old and new accounting in 2019 that the model will drive economic consequences rather than merely reflect them.

A handful of mid-sized banks have also appealed to FASB to revise the CECL model to alter its effect on earnings. The board has not yet determined when or how it will answer those requests.