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12/20/2016

Accounting

FAQs on FASB Standard Continue Promise of Scalability

The federal banking agencies issued frequently asked questions and answers on the Financial Accounting Standards Board’s Current Expected Credit Loss standard. The FAQs reiterate that CECL is scalable to institutions of all sizes and that community institutions are not expected to need to adopt complex modeling techniques and engage third-party service providers to estimate credit loss allowances.

This flexibility is due entirely to the years-long advocacy of ICBA and community bankers, including a 2011 petition and extensive work as part of FASB’s Transition Resource Group. Allowing community banks to continue using qualitative factors, historical losses and spreadsheets is a departure from previous versions of CECL that would have required complex modeling systems.

The agencies said the FAQs are part of their effort to support institutions as they prepare to implement CECL, which begins in December 2019. Read Agency FAQs. Access More CECL Resources.