The SEC’s Division of Economic and Risk Analysis (DERA) has announced that it has concluded its assessment of the way filers are tagging write-offs for their credit quality indicator disclosures in their Form 10-K and their allowance for credit loss. The assessment was conducted only on those filers that have financing receivables and follow Accounting Standards Codification (ASC), Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, a set of accounting standards that modernized the way entities measure credit losses on financial instruments published by the Financial Accounting Standards Board (FASB) in March 2022.
From its analysis of filers’ tagging practices, DERA determined that some filers are:
- Creating custom tags for the tabular disclosure of credit quality indicators. Filers are required to instead use the element FinancingReceivableCreditQualityIndicatorsTableTextBlock from the US GAAP Financial Reporting Taxonomy for that table.
- Disclosing write-offs (related to their allowance for credit loss) by tagging the write-offs with elements referencing ASC Topic 310 (AllowanceForLoanAndLeaseLossesWriteOffs). These elements cannot be used to tag disclosures that are reported under ASC Topic 326. The US GAAP Financial Reporting Taxonomy includes Transition Taxonomy Implementation Notes for these elements indicating that they should not be used after ASU 2016-13, Financial Instruments - Credit Losses is applied. (See Transition Taxonomy Implementation Note for AllowanceForLoanAndLeaseLossesWriteOffs.)
- Creating custom tags for these write-off disclosures. Filers are required to instead use one of the elements from the US GAAP Financial Reporting Taxonomy intended for tagging write-off disclosures of allowance for credit loss which reference ASC Topic 326. (FinancingReceivableAllowanceForCreditLossesWriteOffs)
For additional information on elements related to ASC Topic 326, refer to the FASB's taxonomy viewer for the US GAAP Financial Reporting Taxonomy. For more data quality reminders, see Staff Observations, Guidance, and Trends webpage on the SEC’s website.
Source:
Tagging Allowance for Credit Loss Write-Offs and Credit Quality Indicator in Notes to the Financial Statements (sec.gov)
