In late March 2020, the US Congress passed the CARES Act (Stimulus Package). Part of this act included a temporary deferral for a subset of companies that would have had to apply the updated guidance for expected credit losses (CECL).
Banks, credit unions, or depository institutions insured by the FDIC or NCUA have the option to delay the implementation of the Current Expected Credit Loss guidance (ASU 2016-13, also often referred to as CECL). The delay will extend to the earlier of the conclusion of the national emergency or December 31, 2020.
It should be noted that upon adoption, the guidance update will need to be applied retroactively for the full year in which it is adopted. While this is may serve as a benefit to companies that were not quite ready for the adoption of the new guidance, a company that was prepared to adopt the new guidance will likely not chose to delay the adoption.
For more information about CECL-related accounting updates, implementation considerations, and enhancements to the Clearwater solution, download our Preparing for CECL eGuide.