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  • CECL Accounting?

    Has anyone begun to consider how they are going to account for the new CECL accounting standards in Quickbooks?

  • #2
    Never met anyone who did a financial institutions books in QB which as I understand it that is what CECL applies to. And of course if you are listed on the stock exchange and subject to the SEC rules, they have to implement it too.

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    • #3
      I am having a hard time conceiving how anyone subject to FASB's Accounting Standards Update 2016-13 would even be using QuickBooks. But who know? I've several not-for-profits whose financials must be GAAP compliant who have learned how to use QuickBooks along with appropriate exports to Excel and with appropriate modifications to the equity section can pass an audit. Having those techniques available, the FASB Update for not-for-profits for the year ending December 31, 2017 was fairly easy to implement with a few Excel techniques.

      The same could probably apply in your situation.

      Here's a selection from "Who Is Affected by the Amendments in This Update?":

      The amendments affect entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

      The amendments in this Update affect an entity to varying degrees depending on the credit quality of the assets held by the entity, their duration, and how the entity applies current GAAP.

      But if one were to adopt FASB Update 2016-13, it seems that the main requirement would be a change in accounting terminology. For example, potential credit losses would be presented as an allowance rather than as a writedown.

      Given the deadlines for implementation, it's good that you are planning ahead. Again, from the update:
      For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

      For all other entities, including not-for-profit entities and employee benefit plans within the scope of Topics 960 through 965 on plan accounting, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021
      .
      For more details see https://www.fasb.org/jsp/FASB/Docume...isclaimer=true

      Look at it this way: In addition to an Allowance for Doubtful Accounts, FASB is adding a new Allowance for Credit Losses on Financial Instruments. How to figure such allowances is not a QuickBooks issue. QuickBooks would be only the recording tool for reporting such allowances.
      Last edited by Lorin Browning; 02-20-2019, 09:30 PM.
      Lorin Browning, Ph. D.
      Fellow -- National Tax Practice Institute

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