As U.S. finance companies prepare for major changes in accounting requirements for calculating credit losses, they can benefit from hard lessons learned by international equipment finance businesses that have already tackled similar new standards, said Shawn Halladay, Managing Director of The Alta Group consultancy and head of its professional development practice.
He will discuss implementation strategies for the current expected credit losses (CECL) accounting standard on a panel at Bloomberg Tax and Deloitte’s Financial Instruments: The Way Forward conference May 7 at the Newseum in Washington, D.C.
The conference is designed to help chief financial officers, controllers, financial accountants, auditors, analysts and other professionals prepare for new accounting standards issued by the Financial Accounting Standards Board (FASB), not only ASC 326 on financial instruments, which includes CECL, but also the new hedge accounting standard ASC 815.
Halladay will speak as part of the 10 a.m. panel on “Key Implementation Activities: A Timeline” along with Michael Jacobs, lead quantitative analytics and modeling expert for PNC; Marie J. Robles, Vice President and Controller of Northwest Federal Credit Union; Troy Vollertsen, Partner and U.S. banking Audit Practice Leader for Deloitte & Touche LLP; and moderator Alexey Smurov, Senior Vice President of PNC.
CECL represents a significant shift in generally accepted accounting principles (GAAP) for credit losses. Instead of calculating incurred losses, U.S. finance companies will have to estimate expected credit losses up front and adjust them over the life of the loan, lease or other financial instrument. CECL’s effective dates for calendar-year companies are Jan. 1, 2020 for public businesses that are SEC filers, and Jan. 1, 2021 for all other organizations.
“International equipment leasing companies implemented similar changes last year as part of IFRS 9 (International Financial Reporting Standard 9). My comments will address the commonalities between IFRS 9 and CECL, and lessons learned from the implementation challenges that international lessors experienced, such as properly assessing loss given default,” Halladay said.
Halladay’s career as an equipment leasing and finance professional, trainer, consultant, auditor, author and speaker spans more than 40 years. His areas of consulting expertise include accounting, tax law and analysis. He is a member of the Financial Accounting Committee of the Equipment Leasing and Finance Association.