FASB Rejects Further Deferral of CECL

Earlier this week, the Financial Accounting Standards Board considered and rejected further deferral of the current expected credit loss accounting standard for those banks that have yet to adopt it. CECL will become effective for these entities—which include smaller SEC registrants and private companies—on Jan. 1, 2023.

The FASB board members all expressed full support for simplified methodologies put forth, including of the Federal Reserve Board’s “SCALE” methodology. SCALE, which largely relies on peer allowance coverage ratios, was introduced by the FRB as a result of ABA advocacy to make CECL scalable for community banks.