Accounting for credit losses – Get ready for CECL

Description

Abstract: In a dramatic change to bank accounting guidelines, the FASB recently finalized its long-awaited CECL model for estimating credit losses. This article highlights the most important elements of the new model, including its forward-looking approach (which involves its treatment of covered and PCD assets, as well as its position on estimating losses and accounting for AFS securities) and its impact on community banks. A sidebar explains when banks must adopt the CECL model.