The passage of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act includes a provision giving banks and credit unions a temporary deferral of the Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) No. 2016-13, Financial Instruments — Credit Losses (Topic 326), commonly referred to as CECL.
For large accelerated entities that are U.S. Securities and Exchange Commission (SEC) filers, the CECL standard was set to take effect in January 2020. However, the CARES Act now offers “optional temporary relief” and sets this delay until the end of the year (i.e. December 31, 2020), or whenever the national emergency ends.
In addition, smaller reporting companies that are SEC filers defined as companies with less than $250 million in public float and less than $100 million in revenues , other Public Business Entities (PBEs) and all other private entities were supposed to begin implementing CECL in January of 2021. However, in November 2019 Financial Accounting Standards Board (FASB) has adjusted this implementation date from January 2021 to January 2023. This implementation date has not been adjusted from the CARES Act.
For more information regarding the CARES Act or the impact COVID-19 has on banking institutions, please visit our banking coronavirus resource center.