News Release 04/27/16


Norwalk, CT, April 27, 2016—The Financial Accounting Standards Board (FASB) today voted to proceed with a new accounting standard that provides timelier financial reporting of credit losses on loans and other financial instruments held by financial institutions and other organizations. The final Accounting Standards Update (ASU) is expected to be published in June 2016.

At the meeting, the Board decided to defer the original effective dates by one year to the following:
  • For public companies that meet the definition of a U.S. Securities and Exchange Commission (SEC) filer, the upcoming standard will be effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2019.
  • Other public companies will be required to apply the guidance for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.
  • For private companies, not-for-profit organizations, and employee benefit plans, the standard will be effective for annual periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.
  • Early adoption will be permitted for all organizations for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
The Board also voted to provide practical and transitional relief for certain organizations disclosing vintages.

As a next step, the FASB staff will complete a “ballot draft” of the ASU that includes all of the Board’s final decisions. The ballot draft will be shared with each of the seven Board members, who will review it to ensure that it accurately reflects the decisions made throughout their public deliberations. When the Board is satisfied that the ballot draft reflects its intentions, the draft will be submitted to production for final publication.

The global financial crisis highlighted the need for more timely reporting of credit losses on loans and other financial assets held by banks, lending institutions, and public and private organizations. Current Generally Accepted Accounting Principles (GAAP) accounts for credit impairment using an “incurred loss” approach, which requires recognition of the credit loss to be deferred until the loss is probable (or has been incurred). Many have argued that the incurred loss approach fails to alert investors about credit losses in a timely manner.

The decision to issue the final standard followed extensive stakeholder outreach. The FASB received more than 3,360 comment letters on a 2010 Exposure Draft and a 2012 Exposure Draft. The FASB participated in more than 95 meetings with financial statement preparers; and hosted 8 public roundtables, and 15 preparer workshops. In addition, the FASB met with more than 200 users of financial statements.

It is expected that the final standard will be published in June 2016, giving preparers enough time to review and prepare for the changes by the effective dates.

More information about the upcoming Credit Losses ASU, and the Transition Resource Group for Credit Losses, is available at

About the Financial Accounting Standards Board

Established in 1973, the FASB is the independent, private-sector, not-for-profit organization based in Norwalk, Connecticut, that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP). The FASB is recognized by the Securities and Exchange Commission as the designated accounting standard setter for public companies. FASB standards are recognized as authoritative by many other organizations, including state Boards of Accountancy and the American Institute of CPAs (AICPA). The FASB develops and issues financial accounting standards through a transparent and inclusive process intended to promote financial reporting that provides useful information to investors and others who use financial reports. The Financial Accounting Foundation (FAF) supports and oversees the FASB. For more information, visit