FASB to pursue further CECL improvements

July 16, 2021

The Financial Accounting Standards Board this week agreed to add a project to its technical agenda to investigate the suspension of troubled debt restructuring accounting for entities that have adopted the Current Expected Credit Losses accounting standard.

TDR Project: FASB said the TDR accounting designation and disclosures do not provide stakeholders with valuable information while causing considerable expense for preparers.

TDR Background: TDR accounting has largely been suspended during the pandemic through congressional action and has become a confusing part of loan modification accounting as community banks assist customers.

PCD Project: FASB also agreed to add a project on accounting for impairment of assets acquired in a business combination amid the confusion surrounding purchased credit deteriorated, or PCD, assets.

PCD Frustration: The differences in accounting for PCD and non-PCD assets have caused many stakeholders to express frustration with trying to understand the correct accounting model to apply.

More: FASB also will continue to seek codification improvements in the CECL disclosures surrounding credit loss write-offs and recoveries by year of origination.