FASB Staff Issues Q&A to Help Organizations Estimate Expected Credit Losses on Financial Assets

Board also authorizes staff to plan CECL workshops around the United States


Norwalk, CT, July 17, 2019—The Financial Accounting Standards Board (FASB) staff today issued a second question-and-answer (Q&A) document that addresses more than a dozen frequently asked  questions related to Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

The Q&A document, which is available on the FASB website, covers areas that include: Issued in 2016, the current expected credit losses standard (CECL) requires organizations to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Its objective is to provide financial statement users with an estimate of the net amount the organization expects to collect on those assets. The standard does not require a specific credit loss method; rather, it allows organizations to use judgment to determine the relevant information and estimation methods appropriate for their circumstances.
 
Additionally, earlier today, the Board authorized the FASB staff to plan a series of CECL educational workshops to be held around the country.  More information about the workshops will be available on the FASB website in the coming weeks.