Late last week, the Financial Accounting Standards Board (FASB) issued a final standard related to the financial instrument impairment, comm

only referred to as the current expected credit loss (CECL) model. The Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments documents the largest accounting changes the financial institutions industry has seen in decades.

The new accounting standard applies to all banks, savings associations, credit unions, and financial institution holding companies, regardless of asset size. The effective dates for this new standard are as follows:

  • Nonpublic entities (including credit unions): All nonpublic entities operating on a calendar year must adopt the guidance for the Dec. 31, 2021 year-end financial statements.
  • Public entities filing with SEC: SEC-filer entities will be required to apply the guidance for fiscal years beginning after Dec. 15, 2019, including interim periods within that year.
  • Public entities not filing with the SEC: Public business entities that do not meet the definition of an SEC filer will be required to apply the guidance for fiscal years beginning after Dec. 15, 2020, including interim periods within those fiscal years.
  • Early adoption is permitted for all entities, but not earlier than in 2019.

Due to the complexity of the standard’s requirements, Doeren Mayhew encourages financial institutions to begin planning the implementation of the new standard now.  Rely on our Financial Institutions Group advisors to help interpret the standards, develop an implementation plan and foresee any impact it may have on your institution’s capital. Contact us today.

Stay tuned for information on upcoming Doeren Mayhew events discussing the new CECL standards.