New accounting rules mandating revised accounting and reporting for credit losses on “available for sale” (AFS) debt securities will impact nearly every bank and insurance company, as well as many other entities who hold AFS debt securities. The standard update, which went into effect January 2020, requires holders of AFS debt securities to consider new processes, controls, accounting, and reporting for all AFS debt securities that are in a loss position (i.e., fair value is less than amortized cost). The expectation that this is a small subset of the AFS portfolio has dramatically changed.
Prior to the spread of COVID-19, which is causing major disruptions in the markets, this accounting change was already creating additional, and potentially labor-intensive, compliance requirements to address the new standard. KPMG LLP (KPMG) AFS Credit Loss Services can help ease the compliance and reporting burdens of the new rules and shift the focus of your staff to current operational needs.