FASB Staff Issues CECL Q&A on WARM Method
In response to questions received from stakeholders, the Financial Accounting Standards Board (FASB) staff has issued a Q&A that addresses acceptability of the use of the weighted-average remaining maturity (WARM) method to estimate expected credit losses under Topic 326. The Q&A also includes examples of how the WARM method could be utilized. Although the WARM method is just one of many acceptable methodologies that can be used to estimate expected credit losses, it is widely considered to be a practical approach for less complex pools of financial assets and, more generally, for use by small financial institutions such as community banks.
A link to the Q&A document can be found here.
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