Roundtable on Credit Loss Accounting Rules Set for May 20

FASB has announced it will host a virtual roundtable next month on the implementation of the current expected credit losses (CECL) standard and related technical issues. Panelists will discuss purchased financial assets and credit deterioration (PCD) and troubled debt restructurings (TDR), among other issues, the announcement stated. The board issued Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, to provide more timely reporting of losses companies expect to book from soured loans. The standard was issued in 2016 but took effect in 2020 for large public companies. Smaller reporting companies (SRC), private companies, and not-for-profit organizations have until 2023 to adopt the changes. The event will be livestreamed on May 20 from 9 a.m. to 12.00 p.m. Participants will include representatives from financial institutions of various sizes, regulators, among others, the board said. The event will be lived streamed and archived for 90 days.

Project to Simplify Debt Classification Rules Dropped

FASB voted 5 to 2 to drop a seven-year old project aimed at simplifying the accounting guidance for classifying debt as current or noncurrent on the balance sheet. Changes the board proposed twice over the years would be too costly and tough to apply, board members said on April 14. “We took this on as a very narrow-scoped simplification initiative thinking that we could come up with something that didn’t conflict and butt up with all these operational questions,” FASB Vice Chair James Kroeker said. The board—first in 2017 and then again in 2019—proposed to replace certain industry-specific rules in Topic 470, Debt, with an overarching principle for classifying debt. The proposed changes, however conflict with a general principle for all liabilities in U.S. GAAP. “We thought we could narrowly constrain this to things like fixed term debt, and then we found out that people said ‘some debt’s fixed term and some debt’s convertible. What about liabilities and equity where I have a stock option that fails the criteria and I classify that as a liability? Is that debt, or is that just a general liability?’ So which one am I in,” Kroeker said. “And we can call balls and strikes on every one of those which started to do that and we’ve got internally inconsistent answers.”


Substantial Turnover Expected

The IFRS Foundation said it is seeking four candidates to fill seats this year and next on the IASB, the accounting body that develops international financial reporting standards (IFRS). The foundation is seeking two IASB members from Europe to start from June 30, 2021, and two from the Americas to start April 1 and July 1, 2022, respectively. The initial appointments are for a five-year term and can be reappointed to a second term for at least three more years. Applications should be received by June 30, the foundation said. The IASB comprises 13 members including the chairman. Current Chair Hans Hoogervorst will vacate that seat at the end of June due to term limits. Incoming chair Andreas Barckow will be the third person to hold the chair post since the board’s inception in 2001. By next year, under Barckow, most of the IASB will comprise new members or relatively recently appointed members. The turnover comes at a time when the IASB is also seeking to establish its new five-year work program for 2022 to 2026.