FASB Expands Proposal on Narrow Goodwill Accounting Relief to Include Privately Held Banks

The Financial Accounting Standards Board announced this week that in response to comments by ABA and others, it will expand the scope of a recent proposal on goodwill accounting alternatives for evaluating triggering events. The proposal—which would allow certain private companies the option to evaluate relevant facts and circumstances only as of a period-end in order to determine whether goodwill is impaired—will now cover regulated private banks.

In previous comments, ABA had called on FASB to broaden the scope of its proposal, noting that banks would have been excluded from the proposal as written, given that they are already subject to quarterly regulatory reporting through the Call Report, which includes the reporting of goodwill.

“A primary purpose of the Call Report is to help banking supervisors monitor the safety and soundness of the banks they supervise,” ABA said. “With this in mind, goodwill is excluded from a bank’s regulatory capital and it is also generally disregarded by their investors. Delaying an evaluation of impairment of goodwill until year-end would, therefore, not be misleading to the users of these interim financial statements. Filing a quarterly Call Report should not disqualify a bank from exercising the proposed option.”