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SEC Says Bank Loan Loss Disclosure ‘Critical’ to Accounting (1)

Sept. 20, 2021, 9:08 PMUpdated: Sept. 20, 2021, 10:08 PM

Investors and regulators need detailed information about the evidence banks use to set reserves to cover future losses under major new loan accounting rules, according to the Securities and Exchange Commission.

“It is really critical to be transparent about significant judgments and estimates and making sure that there’s context around what is either being set up or what’s being released and what are the significant drivers of that,” SEC Acting Chief Accountant Paul Munter said Monday at an American Institute of CPAs banking conference.

Large banks started following the current expected credit loss (CECL) accounting standard in 2020. It ...