FASB Sets Up Transition Group for Credit Loss Standard
The Financial Accounting Standards Board has named the members who will serve on a Transition Resource Group to help with implementation of its upcoming credit losses standard.
The Transition Resource Group will function in some ways like the joint TRG that FASB and the International Accounting Standards Board set up for their revenue recognition standard. However, since FASB and the IASB diverged in their approaches to expected credit losses, the group will only be reporting to FASB. Security and Exchange Commission chief accountant James Schnurr had urged FASB to set up the transition group.
The credit loss standard is part of the larger financial instruments project that FASB and the IASB have been working on for over 10 years. The IASB released its version for International Financial Reporting Standards in July 2014, known as IFRS 9 (see IASB Releases Its Own Financial Instruments Standard). FASB released a major part of the standard, for recognition and measurement, in January (see FASB Issues Standard for Financial Instruments Recognition and Measurement). The credit loss part is due to be released in mid-2016.
The Transition Resource Group is tasked with soliciting, analyzing, and discussing implementation issues that could arise when organizations implement the upcoming credit losses standard. The group will then share their views with FASB, which will help the board determine what, if any, action is appropriate to address those issues. The TRG also will provide stakeholders with a forum to learn about the new standard from others involved with implementation.
FASB recently incorporated the feedback it received from the TRG for the revenue recognition standard in deciding in tandem with the IASB to incorporate more guidance on principal versus agent considerations and delay the effective date of the standard for a year (see FASB Amends Revenue Recognition Standard).
“Due to the success of the initial Transition Resource Group for the revenue recognition standard, we decided to establish a similar group to help the board proactively address stakeholder concerns related to the implementation and operationality of the upcoming credit losses standard,” said FASB Chair Russell G. Golden in a statement. “As the TRG discusses these issues, the board can decide if it should take additional steps to provide educational materials on specific areas of concern, or if it needs to clarify the standard accordingly.” Read more on Accounting Today.