Extension of CECL and TDR Relief under the CARES Act

By Gina Omolon

January 22, 2021

On December 27, 2020, the Consolidated Appropriations Act, 2021 (the Act) was signed by the President, consisting of the $1.4 trillion 2021 federal fiscal year budget and $900 billion in COVID-related stimulus, including extensions to the temporary relief granted to banking institutions under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).


Troubled Debt Restructuring

Section 4013 of the CARES Act allowed financial institutions to suspend application of the U.S. GAAP rules relating to troubled debt restructuring (“TDR”) treatment for loans modified due to COVID-related hardships. The Act extends the timeline provided in the CARES Act to the earlier of (a) January 1, 2022 or (b) the date that is 60 days after the date in which the National Emergencies Act terminates. The relief now also includes insurance companies. All other criteria specified in the CARES Act remains unchanged.

Current Expected Credit Losses (“CECL”)

Section 4014 of the CARES Act gave banking institutions the option to delay the adoption of FASB Accounting Standard Update 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), also known as CECL.

Banks, credit unions and bank holding companies that were preparing to adopt CECL on December 31, 2020, can opt to further delay until the earlier of (a) January 1, 2022 or (b) the first day of the fiscal year of the banking institution that begins after the date in which the National Emergencies Act terminates.

What to Watch Out for Next

Be on the look out for possible statement or additional guidance from the SEC and other regulatory agencies in response to the above matters and more.


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Disclaimer of Liability

The information provided here is for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.

Mazars USA LLP is an independent member firm of Mazars Group.

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