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Banks prepare for expected credit loss rules

Tammy Whitehouse | March 7, 2017

Revenue recognition may be the biggest accounting change many companies are facing in the near term, but new rules for recognizing expected credit losses are causing just as many headaches in certain places.

Banks are the first to feel the pangs of this particular accounting standard, given the enormity of the credit instruments they carry on their balance sheets. “This is their revenue recognition,” says Jonathan Prejean, managing director at Deloitte & Touche.

While the requirements don’t kick in until 2020, companies outside of financial services would be wise to tune in. “Don’t ignore it,” says Prejean. “Think about who has large receivables, like trade receivables... To get the full story, subscribe now.