The Financial Accounting Standards Board is proposing to delay the implementation of the current expected credit loss model for private companies, not-for-profit organizations and certain small public companies by two years to January 2023.
FASB had voted in July to create a delay proposal but formally announced the delay Aug. 15. The board requested public comments on the proposal be sent by Sept. 16.
Smaller reporting companies, or those defined by the SEC as having a public float of less than $250 million or with annual revenues of less than $100 million with either no public float or a public float of less than $700 million, are also covered under the CECL delay.
An S&P Global Market Intelligence analysis found more than 92% of U.S. banks will have to comply with CECL by 2023 under the delay, but more than 90% of the banking industry's assets would still be required to comply by 2020.
The FASB also said it will delay the hedging and leases standards by one year to January 2021 for the covered companies. There are no changes in the implementation dates for those who are required to file with the SEC and all other public business entities.
The organization said the implementation delay would give small companies more time to implement these standards.
CECL introduces a new accounting method for recording loan losses by requiring companies to reserve against them at origination, as opposed to the current standard that requires companies to record provisions for loan losses only when a loss is likely to occur. The proposed standard has met opposition from across the banking industry. Congress has also proposed delaying the standard through legislation, though those efforts have slowed.