More work needed to ensure flexibility extends to financial disclosures
Washington, D.C. (April 22, 2016)—The Independent Community Bankers of America® (ICBA) today told the Financial Accounting Standards Board (FASB) that it has taken important steps to address community bank concerns with its proposed accounting standards update. In a letter to FASB Chairman Russell Golden, ICBA President and CEO Camden R. Fine wrote that FASB has made progress in ensuring the Current Expected Credit Loss (CECL) standard is workable for community banks, but more work needs to be done.
“Since the community financial institution roundtable earlier this year, members of the FASB board and staff have devoted a great deal of attention to understanding community bank concerns,” Fine wrote. “While the work completed to date reflects meaningful changes to make the standard more flexible and scalable for community banks, ICBA believes that more must be done, particularly in the area of disclosures.”
The revised CECL proposal is more flexible and scalable for community banks, which will allow them to continue using their personal understanding of their local markets—instead of complex modeling systems—to determine their loan-loss reserves. However, ICBA called on FASB to continue working with community bankers to ensure financial statement disclosures are meaningful, straightforward and don’t become so complex that they cease to be informative.
ICBA, its affiliated state associations, and community bankers have worked to address problems with FASB’s CECL proposal since it was introduced in 2011, including delivering a petition to FASB with nearly 5,000 signatures. Following years of ICBA advocacy, FASB released the revised draft at this month’s meeting of the Transition Resource Group, to which ICBA Vice Chairman Tim Zimmerman was appointed as the sole community bank representative.
The Independent Community Bankers of America®, the nation’s voice for more than 6,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services.