Current Expected Credit Risk Losses: How To Account and Audit Them

Author: Salvatore Collemi

The Financial Accounting Standards Board’s (FASB) new standard on estimating current expected credit losses (CECL) will change the existing accounting and reporting rules for the impairment of financial instruments by incorporating an expected losses approach rather than incurred losses.

This course will:

• Provide you an overall explanation of the key requirements of ASC Topic 326
• Help you understand the details and challenges involving the implementation and the auditing of such transactions
• Assist you in identifying existing information gaps as well as the potential changes to a private company’s internal controls and processes for adopting ASC Topic 326
• Discuss the key financial statement disclosure requirements

Publication Date: May 2025

Topics Covered

• Management's Estimates Represents Lifetime Losses of Instruments
• Available Measurement Approaches
• Scope of Standard
• Management's Challenge
• Audit Committee Oversight
• Internal Control Considerations
• Current Standard vs. Legacy GAAP
• Select Key Accounting Issues
• Presentation and Disclosure Considerations
• Communications with TCWG
• Resources and Tools

Learning Objectives

• Identify the new accounting and reporting requirements in ASC Topic 326 for recording and disclosing estimated credit losses and impairment of certain debt securities and other financial instruments
• Explain the new standard’s goals
• Identify what changes to implement
• Identify how to effectively and accurately estimate, measure, report and properly audit credit losses

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Accounting (1 hour)

Program Prerequisites
Some experience in performing audit engagements

Advance Preparation
None