Fri, Apr 3, 2020

Jonathan Jacobs Feels Covid-19 Puts a Lot of Uncertainty Into the Marketplace

On January 1, 2020, CECL was mandated to be adopted for large public companies for the first time. However, now, the House approved delaying the adoption of ASU 2016-13 including CECL methods until December 31, or when the coronavirus public health emergency ends, whichever comes first.

According to Jonathan Jacobs, Managing Director in the Valuation Services practice at Duff & Phelps, “COVID-19 puts a lot of uncertainty into the marketplace. It has stopped the economy, resulted in record levels of unemployment, and led to an unprecedented federal government stimulus, so there is no correlation to other events.”

Jonathan says that the “impacts will be different depending on whether you are a financial institution, a real estate company with shopping malls, a utility, or an airline or cruise line” and that “nothing fits the coronavirus.” He continues, saying “There is no one true right or wrong answer for assumptions, as long as there is a well-thought-out process for the assumptions being reasonable, supportable, and documented…Even with a well-thought-out process with supportable assumptions that are currently used, there will be CECL adjustments under the model each reporting period as assumptions continue to be refined and more support is obtained.” 

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