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Michael Stinson & Reid Ten Kley, CPA

This guest blog is a special feature authored by Michael Stinson, CEO of Spotlight Financial and Reid Ten Kley, CPA, President of Spotlight Financial.

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Featured Guest: Spotlight Financial

Posted by Michael Stinson & Reid Ten Kley, CPA on 5/21/19 1:07 PM

FASB Approves WARM Methodology for CECL

Community banks and credit unions looking for practical advice on how to implement the new CECL standard received a helping hand from the agency that authored the oft dreaded accounting rule. In a January 2019 Staff Q&A, the Financial Accounting Standards Board (FASB) stated that the weighted average remaining maturity (WARM) method is an acceptable method for less complex financial institutions to estimate expected credit losses. The FASB Q&A Comment also provided a couple different examples on the application of the WARM methodology to comply with CECL, and these examples do a good job of explaining the mathematics behind the calculation. If you haven’t done so already, you can read the FASB Q&A Comment here.

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