Marking Loans to Model is Far Easier and Better than Estimating Loan Loss Allowances: It’s Time to Hear from the FASB Members who Changed Their Minds about That
Tom I'm [Osman Sattar,] a relatively new reader to your blog and I understand that you favour market values in accounting. In this article, you say that: (1) "[B]oth models [the current incurred loss model and the proposed CECL model]…
Pick a Number: Anything but Market for Loan Accounting (Part 2)
In response to my previous post, Edith Orenstein (author of the FEI blog and fellow Ohio State alum) asked me whether I preferred the status quo "incurred," or the proposed "expected" loan loss model (CECL). Also in that post, I…
“Anything But Market” is the FASB’s Mantra for Loan Loss Accounting
At its August 22nd meeting, the FASB came to some significant tentative conclusions regarding the recognition and measurement of loans: "The Board decided that the model [of loan loss measurement] should utilize a measurement objective of "expected credit losses" and…
Revenue Recognition Sure Isn’t Perfect – But Convergence will be much Worse
No one will ever say that U.S. GAAP revenue recognition standards are consistently principles-based, but few would say the system needs to be completely overhauled. Other than to achieve convergence of U.S. GAAP and IFRS, what will a new revenue…
A Lesson in Loan Accounting from an Unexpected Source: Oil and Gas Companies
[This is my fourth consecutive post on loan accounting. Here are the first, second and third.] I love finding accounting lessons buried in stories that on their surface seem to have little to do with accounting. See, for example, my…
The Faulty Reasoning of the IASB’s Three-Bucket Loan Loss Model
This is my third consecutive post on the perils of loan loss reserves (first here; second here); and a fourth is going to follow very soon. My fourthcoming (I couldn't resist the pun J) post will be based on recent…
Can Auditors Help Save Spain’s Banks? Nuts!
Less than a day after posting my critique of the FASB and IASB loan loss allowance proposal, I happily learned that the FASB may be backtracking. According to a PwC In Brief: "After considering the results of outreach efforts and…
It’s Crunch Time for Loan Accounting – and Convergence
Once one chooses to ignore market values and to account for loans on the basis of "amortized cost" – as the IASB has "tentatively" concluded and the FASB may now be starting to question once again – the inevitable and…