
INSIGHTS FOR FINANCIAL INSTITUTIONS	OCTOBER 15, 2015

CONNECT

Director of Financial Institutions
Gary Smith

888.777.2015

Need a speaker or more information on Cyber Security? Contact us at fi@eidebailly.com.

To attend the Eide Bailly Bankers Seminars, visit us at
www.eidebailly.com/FI

ABOUT US

Eide Bailly is a top 25 CPA firm in the nation, serving more than 500 financial institutions across the nation by providing expertise to our clients with the following services:

Compliance Consulting
Directors' Examination

Enterprise Risk Management

Financial Statement Audits
Forensic & Valuation
Internal Audit

Interest Rate Risk
Loan Review Services
M&A Consulting
Tax Planning & Preparation
Technology Consulting

The Wire is published on an as-needed basis to keep our clients, prospects and business friends informed on current news.

QUESTIONS?

If you have questions, Please contact your Eide Bailly professional or

Eide Bailly Financial Institutions at 888.777.2015 or fi@eidebailly.com.

Current Expected Credit Losses (CECL) Standard Set for Early 2016 Issuance

The Financial Accounting Standards Board (FASB) expects to issue in early 2016 its chief response to the 2008 financial crisis. The standard, known as the Current Expected Credit Losses model (CECL), will require financial institutions to consider future losses on loans when estimating their loan loss reserves. The new schedule for the much-watched CECL standard is a delay from FASB's previous estimate of issuing the final standard by the end of 2015.

'Fatal Flaw' Stage

The issuance of CECL standard is in what the FASB refers to as "fatal flaw" stage. The "fatal flaw" stage is where a limited group reviews the proposed standard for any inconsistencies that would create significant hardships in implementation. Critics of the CECL standard are concerned about how a financial institution will be able to justify the reported reserves to external auditors when so much judgment is involved. Additionally, during the Federal Reserve Bank of Minneapolis Accounting Roundtable, it was communicated that loan loss reserve levels will most likely increase upon transition from the current incurred loss model to CECL.

Under the CECL standard, financial institutions are required to consider past loan loss experience, future estimates, and current trends in the economy to determine adequate loan loss reserves. FASB believes the CECL standard will provide regulators and investors a better sense of the financial institution's performance and soundness.

For further information, please contact your local Eide Bailly financial institutions professional.

This publication is produced and published by Eide Bailly and distributed with the understanding that the information contained does not constitute legal, accounting or other professional advice. It is not intended to be responsive to any individual situation or concerns as the contents of the publication are intended for general informational purposes only. Readers are urged not to act upon the information contained in this publication without first consulting competent legal, accounting or other professional advice regarding implications of a particular factual situation. Questions and information for publication can be submitted to your Eide Bailly representative. To request reprints of this publication, send a written request to RequestReprints@eidebailly.com. Copyright Eide Bailly 2015.