FASB admits ‘strong desire for convergence’ with IASB—at least in accounting standard for credit losses

BVWireIssue #127-1
April 3, 2013

Last week, the Financial Accounting Standards Board (FASB) decided to postpone the comment deadline for Proposed Accounting Standards Update, Financial Instruments—Credit Losses (Subtopic 825-15) until after the busy tax season, or until May 31, 2013.

“The decision was made in response to stakeholder requests for more time to consider the FASB's proposals on credit losses as well as the related staff ‘Frequently Asked Questions’ document that was issued earlier this week,” says a FASB release. “Stakeholders also expressed a desire to consider the International Accounting Standards Board's (IASB) proposal on credit losses, which was issued for public comment on March 7, 2013.”

The FASB’s model proposes a single “expected credit loss” measurement objective for recognizing losses, replacing the multiple impairment models that currently existed under U.S. GAAP, which generally require that a loss be “incurred” before it is recognized. The FASB proposal would require management to estimate any cash flows it does not expect to collect using “all available information, including historical experience and reasonable and supportable forecasts about the future.”

"Given our strong desire for a converged standard, the FASB encourages stakeholders to also consider the proposal issued by the IASB, which differs in some respects, and to share your views on the appropriate path forward,” says FASB chair Leslie Seidman.

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