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The statement will promote consistency in the interpretation and application of the Financial Accounting Standards Board’s credit losses accounting standard, which introduces the current expected credit losses (CECL) methodology.
The interagency policy statement describes the measurement of expected credit losses using the CECL methodology and updates concepts and practices detailed in existing supervisory guidance that remain applicable.
The Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency issued the interagency policy statement, which will be effective at the time of each institution’s adoption of the credit losses accounting standard.
The agencies also finalized interagency guidance on credit risk review systems. The guidance presents principles for establishing a system of independent, ongoing credit risk review in accordance with safety and soundness standards.
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 30
[Docket No. ID OCC-2019-0013]
FEDERAL RESERVE SYSTEM
12 CFR Part 208
[Docket No. OP-1680]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 364
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 741
Interagency Policy Statement on Allowances for Credit Losses
AGENCY: Office of the Comptroller of the Currency (OCC), Treasury; Board of
Governors of the Federal Reserve System (Board); Federal Deposit Insurance
Corporation (FDIC); and National Credit Union Administration (NCUA).
ACTION: Final interagency policy statement.
SUMMARY: The Office of the Comptroller of the Currency, the Board of Governors of
the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National
Credit Union Administration (collectively, the agencies) are issuing an interagency policy
statement on allowances for credit losses (ACLs). The agencies are issuing this
interagency policy statement in response to changes to U.S. generally accepted
accounting principles (GAAP) as promulgated by the Financial Accounting Standards
Board (FASB) in Accounting Standards Update (ASU) 2016-13, Financial Instruments –
Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and
subsequent amendments issued since June 2016. These updates are codified in
Accounting Standards Codification (ASC) Topic 326, Financial Instruments – Credit
Losses (FASB ASC Topic 326).
This interagency policy statement describes the measurement of expected credit
losses under the current expected credit losses (CECL) methodology and the accounting
for impairment on available-for-sale debt securities in accordance with FASB ASC Topic
326; the design, documentation, and validation of expected credit loss estimation
processes, including the internal controls over these processes; the maintenance of
appropriate ACLs; the responsibilities of boards of directors and management; and
examiner reviews of ACLs.
DATES: The interagency policy statement is available on [INSERT DATE OF
PUBLICATION IN THE FEDERAL REGISTER].
FOR FURTHER INFORMATION CONTACT:
OCC: Amanda Freedle, Senior Accounting Policy Advisor, Office of the Chief
Accountant, (202) 649-6280; or Kevin Korzeniewski, Counsel, Chief Counsel’s Office,
(202) 649-5490; or for persons who are hearing impaired, TTY, (202) 649-5597.
BOARD: Lara Lylozian, Chief Accountant–Supervision, (202) 475-6656; or Kevin
Chiu, Accounting Policy Analyst, (202) 912-4608, Division of Supervision and
Regulation; or David W. Alexander, Senior Counsel, (202) 452-2877; or Asad Kudiya,
Senior Counsel, (202) 475-6358, Legal Division, Board of Governors of the Federal
Reserve System, 20th and C Streets NW, Washington, DC 20551. For the hearing
impaired only, Telecommunication Device for the Deaf (TDD), (202) 263-4869.
FDIC: Shannon Beattie, Chief, Accounting and Securities Disclosure Section, (202)
898-3952; or John Rieger, Chief Accountant, (202) 898-3602; or Andrew Overton,
Examination Specialist (Bank Accounting), (202)-898-8922; Division of Risk
Management Supervision; or Michael Phillips, Counsel, (202) 898-3581, Legal Division,
Federal Deposit Insurance Corporation, 550 17th Street, NW, Washington, DC 20429.
NCUA: Technical information: Alison Clark, Chief Accountant, Office of Examination
and Insurance, (703) 518-6611 or Legal information: Ariel Pereira, Staff Attorney,
Office of General Counsel, (703) 548-2778. National Credit Union Administration, 1775
Duke Street, Alexandria, VA 22314.