Three-hour virtual event on CECL to look at technical issues, including PCDs, TDRs

FASB sponsors 'roundtable' to address key issues, gather feedback

Implementation of the new current expected credit losses (CECL) accounting standard – particularly technical issues related to purchased financial assets with credit deterioration and troubled debt restructurings – will be the subject of a three-hour virtual event scheduled for mid-May, the accounting industry’s standards group said Tuesday.

According to the Financial Accounting Standards Board (FASB), which is hosting the virtual roundtable on CECL, the event will be webcast live on May 20 from 9 a.m. to noon ET.

The organization said the roundtable – which it also termed a “listening session” – is aimed at helping FASB members and staff gather additional feedback on implementation for the CECL standard. It specifically pointed to asset credit deterioration (PCD) and the debt restructurings (TDRs) as key technical issues that will be addressed.

Right now, the standard – which calls for an estimation of expected losses over the life of loans held in order to improve timely reporting – is scheduled to take effect on Dec. 15. For smaller financial institutions and companies, including privately held banks, credit unions, and others, the standard will take effect in January 2023 (the result of action taken by FASB in late 2019 which effectively delayed the compliance date by a year).

The CECL accounting standard has been the target of considerable concern and criticism from within the banking industry, particularly with regard to compliance and its cost. Last year, as part of that criticism, Congress mandated that the Treasury Department conduct a study to determine the impact of the accounting standard on credit availability and lending standards.

Treasury reported back late in the year that there is little connection between the CECL standard and its impact on lending – but did recommend that regulators continue to monitor the impact of the standard on regulatory capital.

In a release Tuesday, FASB said its staff at the May 20 event will share feedback received to date on the accounting standard and asked for the thoughts and observations of participations. The group said those participants will include representatives of financial institutions (various sizes), regulators, and other stakeholders. A list of all participants will be posted to the FASB website prior to the meeting, the Norwalk, Conn., organization said.

The roundtable meeting will be live streamed on the FASB website.

FASB to Host Virtual Credit Losses Roundtable on May 20, 2021