Tagging Allowance for Credit Loss in Notes to the Financial Statements
Nov. 3, 2022
Staff in the Commission’s Division of Economic and Risk Analysis has completed an assessment of how filers are tagging disclosures related to their allowance for credit loss in their financial statements notes in Form 10-K. The assessment was performed on only those filers that have adopted the Current Expected Credit Loss (CECL) model under Accounting Standards Codification (ASC) Topic 326, Financial Instruments – Credit Losses, published by the Financial Accounting Standards Board.
Staff has observed that some filers that have adopted ASC Topic 326 continue to use the element us-gaap:LoansAndLeasesReceivableAllowance to tag the allowance for credit loss. That element references ASC Topic 310 and should not be used to tag disclosures that are reported under ASC Topic 326. Moreover, the U.S. Generally Accepted Accounting Principles (GAAP) Financial Reporting Taxonomy includes a Transition Taxonomy Implementation Note for that element indicating that it should no longer be used upon adoption of Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses. Filers should instead use one of the elements intended for tagging allowance for credit loss that references ASC Topic 326 (e.g., us-gaap:FinancingReceivableAllowanceForCreditLosses, us-gaap: FinancingReceivableAllowanceForCreditLossExcludingAccruedInterest).
Staff has also observed that some filers are creating custom tags to tag their allowance for credit loss related to off-balance sheet exposures. They should instead use the standard element us-gaap:OffBalanceSheetCreditLossLiability to tag those amounts.
For more information on transition elements upon adoption of ASC Topic 326, please refer to the FASB’s taxonomy viewer for the U.S. GAAP Financial Reporting Taxonomy. For more data quality reminders, see Staff Observations and Guidance.