In a new letter to the Financial Accounting Standards Board related to implementation issues of the Current Expected Credit Loss, or CECL, accounting standard, the American Bankers Association emphasized that “a consistent message has emerged: for community banks, CECL costs far outweigh its benefits.”
The letter comes in support of FASB’s “post-implementation review” process over new standards, with a public roundtable scheduled for May 12. Citing the significant recurring costs of model validation and the documentation of qualitative analysis, as well as other issues, ABA called on FASB, regulators and auditors to work with community bankers to reduce these costs and expand the use of various types of external information to enable more efficient and transparent credit loss estimates.
“While we believe this path forward is not necessarily the responsibility of FASB, we do believe that an intentional and ongoing effort that includes FASB, community bankers, banking supervisors and auditing representatives can eventually right-size internal control expectations while providing better decision-useful information,” ABA said.
