CAQ Tool Helps Audit Committees Oversee Implementation of New Credit Losses Standard

The Center for Audit Quality (CAQ) has released a new tool designed to help audit committees exercise their oversight responsibilities as companies implement a new credit losses accounting standard that begins to take effect in January 2020.

“The new standard has broad implications and will fundamentally change how companies account for credit losses,” said CAQ Executive Director Julie Bell Lindsay. “Investors are looking to understand the impact of the new standard, and our tool is designed to help audit committee members, auditors, and company management understand that impact and to plan for a timely implementation.”

The CAQ tool, Preparing for the New Credit Losses Standard: A Tool for Audit Committees, has been organized into four primary sections.

Understanding the Standard provides a brief overview of the core principles of the standard.
Evaluating the Company’s Impact Assessment suggests questions that audit committees may consider when discussing the impact the new standard will have on the company with management and auditors.
Evaluating the Implementation Plan assists audit committees in their efforts to understand and evaluate management’s implementation plan.
Other Important Implementation Considerations provides audit committees with other considerations such as transition methods and new disclosure requirements

Throughout the tool, audit committee members will find important questions to consider for successful implementation. Additionally, the publication features a list of resources produced by leading auditing firms and the American Institute of CPAs.