Federal Reserve Urges Bankers to Move Quickly Implementing Credit Loss Standard
Joanne Wakim, the Federal Reserve’s chief accountant, urged banks to not waste time implementing FASB’s new credit loss standard. The standard goes into effect in 2020, but banking supervisors want financial institutions to be fully prepared ahead of time so they will not have to rush their implementation. “Banks should adopt and then adapt,” Wakim said at the AICPA’s National Conference on Banks and Savings Institutions on September 12 in National Harbor, Maryland. “Now is the time to really put your plan together, to try work through all these issues around method, data, obstacles … and some of the accounting issues or implementation issues that arise.” Wakim emphasized that regulators will not know the issues facing the banking industry until banks are implementing the standard. With much of the implementation issues ironed out ahead of time, “ideally you won’t have to spend a lot of time and resources trying to figure something out and do a course correction later on.”
Next Standards-Setting Initiatives up for Debate
FASB’s next big standards-setting project was expected to be decided at its September 20 meeting. The board plans to debate whether to add projects to its agenda on accounting for intangible assets, accounting for pensions and post-retirement benefits, distinguishing between liabilities and equity, or overhauling the guidance for performance and cash flows. FASB has said it cannot and will not tackle all four projects, but each one could still be a complex, time-consuming endeavor, and there are no clear paths forward on any of them. Furthermore, if FASB were to decide on any project, it might be several years before it is completed. FASB has received mixed feedback from investors, businesses, and audit firms on where its priorities should lie.
Exposure Draft Offers Guidance for Compilation and Review Services under International Standards
The AICPA’s Accounting and Review Services Committee (ARSC) is proposing guidance for compilation and review services for financial statements prepared in an international financial reporting framework. The proposal is also intended to harmonize the requirements for a CPA’s consideration of an entity’s ability to remain a going concern in a compilation or review engagement with the audit guidance for interim financial information. If the proposed guidance is finalized, it will create a review and compilation standard, , AR-C Section 100, “International Reporting Issues,” and withdraw Interpretation 1, “Considerations Related to Reviews Performed in Accordance With International Standard on Review Engagements (ISRE) 2400 (Revised),” to AR-C Section 90, “Review of Financial Statements,” the AICPA said. The comment period ends on December 14, and the proposed effective date is for compilations and reviews of financial statements for reporting periods that end on or after June 15, 2019.