SEC Revises Loan Loss Guidance as Accounting Change Nears

Banks and financial institutions preparing for a major change in how they calculate and report loan loss reserves have fresh guidance from the Securities and Exchange Commission.

• The SEC on Nov. 19 issued Staff Accounting Bulletin 119, which updates previous guidance to reflect the new accounting standard known as the current expected credit loss model, or CECL. Beginning in January, most banks and other large companies will have to book losses for failed loans much sooner than under previous accounting.
• The guidance builds on existing best-practices like documenting the modeling method, providing analysis that supports any judgments in ...