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Lending & Credit Risk

FASB proposal: How to draft a comment letter

March 5, 2013
Read Time: 0 min

Many institutions are concerned that allowance levels as a whole would likely rise with the implementation of FASB’s latest proposal, which outlines a new Current Expected Credit Losses (CECL) model. To allow for feedback on the proposal, the FASB allows for individuals and organizations to draft comment letters. With a deadline of May 31, 2013, what is the best way to draft a comment letter?

During a recent webinar, FASB’s CECL Model: How it will impact your ALLL, Tom Danielson and Todd Sprang, partners at CliftonLarsonAllen, discussed tips for drafting comment letters.

Danielson suggested it would be worthwhile to read the first 40-50 pages of the exposure draft, speak with your accounting firm, auditors, and examiners and read comment letters from others prior to drafting your own. Sprang noted that you don’t have to comment on every part of the exposure draft and that there are specific questions addressed to users of financials, auditors, preparers, etc. He mentioned that picking a few parts and responding in a letter, instead of choosing a form letter written by someone else and signing on to it, would be much more effective.

If you are ready to draft a comment letter, detailed instructions can be found on FASB’s electronic feedback form.

As Danielson stated during the webinar, “The FASB takes comments very seriously. In fact, one of the reasons why we’ve gone through two or three different versions at this point is based on comments they have received. They’ve changed their minds a number of times.”

For more information on FASB’s CECL Model proposal, download the following whitepaper: FASB’s New Current Expected Credit Losses Model: How it Impacts ALLL.

 

Tom Danielson and Todd Sprang are partners at CliftonLarsonAllen, LLP. Danielson has over 30 years experience providing audit, tax, loan review and consulting services to the financial institutions industry. Sprang has 20 years of auditing and consulting experience in the financial institutions industry and serves as a member of the AICPA Depository Institutions Expert Panel. Tom can be reached via email at [email protected]. Todd can be reached via email at [email protected].

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