Regulators Urge Firms to Implement Action Plans for Compliance with New Standard
The Financial Accounting Standards Board’s latest Accounting Standards Update, ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), sets out the final impairment credit accounting standard with detailed guidance on the new loss reserve model, Current Expected Credit Loss. FASB claims the new standard will improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations.
Affected organizations face several compliance challenges but the main areas of impact are: modeling, data and IT systems, business processes accounting, disclosures and reporting, as well as internal audit and controls.