White paper

Implementation and audit readiness for lenders: ASC 326

Feb 28, 2022
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Financial institutions
CECL Audit Financial assets Financial management

With the changes it brings to the measurement of credit losses on financial instruments, the Financial Accounting Standards Board’s issuance of Accounting Standards Update 2016-13, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, is arguably the most sweeping modification in accounting practices for lenders in many years. Our white paper, Implementation and audit readiness for lenders: ASC 326, provides important information to members of management responsible for implementation of Accounting Standards Codification (ASC) Topic 326 and audit committees responsible for overseeing those implementation efforts.

Our white paper was developed to help entities implement ASC 326 and considers relevant accounting and auditing literature, regulatory guidance, observations from public company adoption, and other industry developments specific to the adoption of ASC 326. An executive summary provides a broad overview of implementation and audit readiness considerations, and then each of these considerations is expanded upon in the remainder of the paper. The considerations covered relate to policies and procedures, use of third-party service providers and vendors, supporting documentation, internal controls and transition.

While certain accounting matters are addressed in this white paper, it does not include an all-inclusive discussion of ASC 326. For further discussion of the accounting under ASC 326, please refer to our publication, A guide to accounting for investments, loans and other receivables.

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