After the financial crisis of 2008, many constituents criticized the accounting models for recognizing credit losses on financial assets because many of these models delay recognition until a loss is incurred. In an April 2009 report analyzing the causes of the global financial crisis, the Group of 20, consisting of the finance ministers and central bank governors of the major global economies, made several recommendations. Among other things, the report recommended that the accounting principles related to credit loss provisioning be improved to permit consideration of a broader range of credit information.
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) established a Financial Crisis Advisory Group (FCAG) to advise the Boards on improvements in financial reporting in response to the financial crisis. They recommended that the FASB and IASB explore an accounting model for impairment that uses more forward-looking information, such as an expected loss model or fair value model.
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