1.1 Background

The aim of the current expected credit loss (CECL) model in ASC 326 is to avoid delayed recognition of credit losses, which was viewed as a weakness under previous U.S. GAAP credit loss models. ASC 326 resulted from years of deliberating various credit loss recognition models (sometimes jointly with the International Accounting Standards Board [IASB®]). The FASB issued its final standard on the measurement of expected credit losses, ASU 2016-13 (codified as ASC 326), in 2016. The timeline below depicts the stages in the Board’s development of that guidance, beginning with the Financial Crisis Advisory Group’s (FCAG’s) recommendation, in 2008, that the FASB and IASB develop a credit loss model that incorporates forward-looking information and eliminates barriers to the timely recognition of losses under incurred loss models.