User login

FASB Proposes Changes to Calculation of Credit Losses for Financial Instruments

 

The Financial Accounting Standards Board (FASB) issued a proposed accounting standards update regarding financial reporting of expected credit losses on loans and other financial assets held by financial institutions, including credit unions on December 20.

The proposed model would utilize a single “expected loss” measurement for the recognition of credit losses, which would replace the multiple existing impairment models in U.S. generally accepted accounting principles (GAAP) that generally use an “incurred loss” approach.  Under the proposal, the reporting entity would be required to estimate the cash flows that it does not expect to collect, using all available information, including historical experience and forecasts about the future.

FASB is accepting public comments on the proposal until April 30, 2013. CUNA’s Regulatory Comment Call on the proposed accounting standards update will be available shortly on the Comment Call page.

Share/Save