WASHINGTON—The Financial Accounting Standards Board (FASB) met this week to discuss whether it would be appropriate to recognize an insurance recovery asset in conjunction with an insured expected credit loss under the amendments included in its current expected credit loss (CECL) standard. During the meeting, FASB staff indicated they were not currently working on any major substantive issues related to CECL.
FASB staff determined recognition would be appropriate under CECL, as long as such recognition met a particular scope exception from applying derivative accounting for certain insurance or certain financial guarantee contracts and passing the risk transfer test in Subtopic 340-30 and Subtopic 944-20, NAFCU said.
Additionally, FASB gave a status update on workshops devoted to CECL, sharing they plan to conduct at least six more workshops across the country this year and are open to requests from credit unions who wish to arrange a workshop. View the currently planned workshops.
Earlier this week, FASB issued a new accounting standards update for its major standards, including CECL. According to the board, the update intends to make "narrow-scope" improvements and is part of FASB's ongoing codification improvement project, aiming to clarify specific areas of accounting guidance in efforts to avoid "unintended application," NAFCU said.