The Financial Accounting Standards Board (FASB) on May 7, 2018, published a limited update to U.S. generally accepted accounting principles (GAAP) to erase from its financial services accounting standard a reference to an obsolete piece of bank regulatory guidance.
Accounting Standards Update (ASU) No. 2018-06, Codification Improvements to Topic 942: Financial Services—Depository and Lending, gets rid of a reference to the Office of the Comptroller of the Currency’s (OCC) Banking Circular 202, Accounting for Net Deferred Tax Charges, from FASB Accounting Standards Codification (ASC) 942-740-45-1, Financial Services—Depository and Lending—Income Taxes — Other Presentation Matters — Differences Between Regulatory Accounting Principles and GAAP, formerly Emerging Issues Task Force Issue (EITF) No. 85-31. The OCC published the guidance in 1985 but has since rescinded it.
“The codification guidance related to it no longer is relevant,” the FASB said.
The amendment is effective immediately, the FASB said.
The final amendment comes from a proposal the FASB released in June 2017 as Proposed (ASU) No. 2017-260, Technical Corrections and Improvements to Topic 942: Financial Services—Depository and Lending—Elimination of Certain Guidance for Bad Debt Reserves of Savings and Loans.
The main thrust of the plan would have superseded guidance related to what the board previously believed was outdated deferred tax guidance on bad debt reserves of savings and loans that arose after Dec. 31, 1987. In reviewing feedback on the plan, however, the FASB found out that the guidance is still relevant for certain small banks and thrift savings associations.
In April, the FASB decided to keep the bad debt reserves guidance intact. (See Guidance for Bad Debt Reserves to Remain in U.S. GAAP in the April 12, 2018, issue of Accounting & Compliance Alert.)
The May 7 update is part of the FASB’s regular effort to comb through U.S. GAAP to find obsolete or inaccurate information and make appropriate technical corrections.
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