NASBP is pleased to publish Jere Shawver’s article below, which describes a recent Financial Accounting Standards Board (FASB) update on an issue the Private Company Council (PCC) has seen as a top priority for the PCC in 2024 and 2025. Below he helps explain FASB’s update on the measurement of credit losses for accounts receivable and contract assets.

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) on July 30, 2025 that improves guidance on the measurement of credit losses for accounts receivable and contract assets.

The optional guidance addresses cost and complexity challenges stakeholders face when applying Topic 326, Financial Instruments—Credit Losses, to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers.

More specifically, that guidance provides (1) a practical expedient for all entities related to development of reasonable and supportable forecasts that are part of estimating expected credit losses and (2) an accounting policy election for entities other than public business entities to consider collection activity after the balance sheet date when estimating expected credit losses.

The Private Company Council (PCC) initiated standard-setting activity in response to feedback from private company stakeholders, including NASBP members.

The amended guidance is expected to provide information that is useful to investors and other financial statement users in making related decisions while reducing the time and effort necessary for preparers and practitioners to analyze and estimate credit losses for current accounts receivable and current contract assets.

More information about the PCC is available on our webpage at www.fasb.org/pcc. I appreciate NASBP’s interest in the PCC’s activities and look forward to continued dialogue with NASBP members.

The views expressed in this article are those of Shawver only. Official positions of the PCC and the FASB on accounting matters are determined only after extensive public due process and deliberation.

Shawver provided an article for the March/April 2025 Pipeline on a list of priorities that the PCC identified in March 2025 as the most pressing financial reporting issues affecting private companies. See the article here:  https://www.nasbp.org/pipeline-newsletter/the-pcc-advising-fasb-on-private-company-financial-reporting-priorities/. (Access requires NASBP login.)

PCC Chair Jere Shawver has over 40 years of experience advising companies on financial reporting, accounting, and business matters, across a wide range of industries including, manufacturing and distribution, construction and real estate, higher education, hospitality, government contracting, and technology. He retired in May 2025 as Chief Executive Officer of Baker Tilly US, LLP, where he was responsible for managing the assurance practice and risk management, including the Office of the General Counsel.