NORWALK, Conn.–The current expected credit losses (CECL) accounting standard has been updated by the Financial Accounting Standards Board (FASB.
The update includes expanded disclosures and improved accounting, particularly for troubled debt restructurings (TDRs) for those that have adopted the standard and gross write-offs of vintage disclosures, according to the organization.
FASB said changes to the CECL accounting standard are intended to improve the decision usefulness of information provided to investors about certain loan refinancings, restructurings, and write-offs. The organization said the changes create a single model for loan modification accounting by creditors while providing improved loan modification and write-off disclosures.
In addition, FASB said the changes include elimination the accounting guidance for TDRs by creditors that have adopted CECL while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors made to borrowers experiencing financial difficulty.
Reason for Update
The accounting group said it made the update after hearing various parties that measurement of expected losses under the CECL model already incorporates losses realized from restructurings that are TDRs and that relevant information for investors would be better conveyed through enhanced disclosures about certain modifications. FASB noted that questions had been raised around the relevance of the TDR designation and “the decision usefulness of disclosures about those modifications.”