Possible extension of TDR and CECL relief provided by CARES Act
FINANCIAL REPORTING INSIGHTS |
Authored by RSM US LLP
The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) provided certain temporary optional financial reporting relief to specific entities related to the applicability of the troubled debt restructuring (TDR) accounting model by lenders and the adoption of the current expected credit losses (CECL) model by certain financial institutions. If the $900 billion COVID-19 relief bill recently passed by the U.S. Congress is signed into law by the President, the temporary optional relief would be extended as follows:
- TDR relief. The end date for the relief related to a financial institution, including an insurance company, electing to suspend both of the following for qualifying modifications would be extended from the earlier of December 31, 2020 or 60 days after the national emergency concerning COVID-19 declared by the President terminates to the earlier of January 1, 2022 or 60 days after the national emergency concerning COVID-19 declared by the President terminates: (a) application of Subtopic 310-40, “Receivables – Troubled Debt Restructurings by Creditors,” of the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification to loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a TDR and (b) any determination of a loan modified as a result of the effects of the COVID-19 pandemic as being a TDR, including impairment for accounting purposes.
- CECL relief. The end date for an insured depository institution, bank holding company or any affiliate thereof not being required to comply with Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, including the CECL methodology for estimating allowances for credit losses, would be extended from the earlier of December 31, 2020 or the date the national emergency concerning COVID-19 declared by the President terminates to the earlier of the first day of the fiscal year beginning after the national emergency terminates or January 1, 2022.
Entities affected by the TDR relief and (or) the CECL relief should closely monitor developments related to the President signing the previously mentioned $900 billion COVID-19 relief bill recently passed by the U.S. Congress, as well as any related information that may be provided by the staff of the U.S. Securities and Exchange Commission, the FASB or banking regulators.
Call us at (325) 677-6251 or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by RSM US LLP and originally appeared on 2020-12-22.
2020 RSM US LLP. All rights reserved.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Condley and Company, LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Condley and Company can assist you, please call (325) 677-6251.