ABA and the Bank Policy Institute today offered feedback to the financial regulatory agencies on a recently proposed policy statement aimed at providing guidance for institutions implementing the current expected credit loss accounting standard. Among other things, the associations emphasized the need for CECL-related guidance particularly for smaller institutions and urged regulators to clarify their capital management expectations under the CECL framework.
“Given the enormous change that CECL represents, the associations believe that a final policy statement should clarify how expectations related to CECL practices and analyses may differ from current incurred loss accounting and how current practices (such as nonaccrual and charge-off practices) might change,” the groups wrote. They added that the final statement should “reduce conflicting messages from other organizations (such as the [American Institute of CPAs] and [Financial Accounting Standards Board]) as to supporting documentation and internal controls.”
