Allowance for credit losses & CECL

Make the adaptations for CECL in time

The replacement of the incurred loss model with the current expected credit loss (CECL) model means the clock is now ticking for you to calculate allowance for credit losses differently. It also brings change for your data collection processes. Our deep understanding of this standard – and the requirements and deadlines that go with it – allows Crowe to help you plan for and implement its adoption in your accounting and financial reporting and data collection.

Timing considerations

As of Nov. 15, 2019, the Financial Accounting Standards Board (FASB) has updated the effective date of the CECL standard for certain small public companies and other private companies. The effective dates of the standard are now as follows.

ASU 2016-13 (credit impairment) effective dates
SEC filers,¹ excluding smaller reporting companies (SRCs)	All other entities, including SRCs²
Fiscal years beginning after Dec. 15, 2019	Fiscal years beginning after Dec. 15, 2022

¹ As defined by the FASB Accounting Standards Codification Master Glossary. The FASB’s decisions maintain the current effective date for Accounting Standards Update (ASU) 2016-13 for Securities and Exchange Commission (SEC) filers other than SRCs but would provide SRCs and all other entities with an extra year to adopt ASU 2016-13.

²Includes all other public business entities (PBEs), including SRCs, private companies, not-for-profit organizations, employee benefit plans, and emerging growth companies that have elected to adopt new accounting standards using private company effective dates. To determine if an entity qualifies as an SRC, the entity would use its status as of its most recent testing date under SEC guidance upon issuance of the codification change.

The FASB reaffirmed its decision to permit early adoption for all entities for fiscal years beginning after Dec. 15, 2018, including interim periods within those fiscal years.