ASU 2014-15 Going Concern Assessment

ASU 2014-15 Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern is effective December 31, 2016 for calendar year-end companies.

For 2016 calendar year companies, management is required to apply the new guidance (i.e., ASU 2014-15) related to the assessment of the reporting entity’s ability to continue as a going concern. Management is required to consider events and conditions up to and within one year from the issuance date of the financial statements to determine if conditions exist, or will exist, that give rise to “substantial doubt” about the company’s ability to meet its obligations. If it is determined that substantial doubt exists, certain disclosures are required, regardless of whether such doubt is alleviated by management’s plans.

On August 27, 2014, the FASB issued ASU 2014-15, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if “conditions or events raise substantial doubt about [the] entity’s ability to continue as a going concern.” The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted.

Additional information:

Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern
PwC In depth FASB defines management’s going concern assessment and disclosure responsibilities
EY To the Point - FASB requires management to assess an entity’s ability to continue as a going concern 
BDO FASB Flash Report - September 2014
Deloitte Heads Up — FASB Issues ASU on Going Concern

FASB Issues New Guidance on Accounting for Credit Losses

On June 16, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326) (the “ASU”) that improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments. The new ASU will impact both financial services and non-financial services entities.

 

Highlights from FASB News Release on 06/16/16

 

 

The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates...

 

The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.

 

Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

 

The ASU will be effective for SEC filers in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years beginning after December 15, 2021. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

 

Additional Information:

• ASU FASB ASU 2016-13—Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
• FASB In Focus: Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326)
• FASB Understanding Costs and Benefits: Accounting Standards Update, Credit Losses (Topic 326)
• KPMG Defining Issues: FASB Accelerates Recognition of Credit Losses
• EY To the Point - FASB issues sweeping changes to credit loss guidance
• Deloitte Heads Up — FASB issues standard on accounting for credit losses
• PwC In brief - Allowance for loan and lease losses – FASB issues final impairment standard
• GT On the Horizon -- FASB issues new standard on measuring credit losses
• BDO FASB Flash Report - FASB Issues ASU on Credit Losses on Financial Instruments