Allowance for Current Expected Credit Loss

12 Months Ended

Mar. 31, 2022

Allowance for Current Expected Credit Loss

Allowance for Current Expected Credit Loss (CECL)

ASU 2016-13 requires that an allowance for expected credit losses be recognized for certain financial assets that reflects the current expected credit loss over the financial asset’s contractual life. The valuation allowance considers the risk of loss, even if remote, and considers past events, current conditions and reasonable and supportable forecasts.

We are exposed to credit losses primarily through sale of products and services and notes receivable from third-parties. A counterparty’s ability to pay is assessed through a credit process that considers the payment terms, the counterparty’s established credit rating or our assessment of the counterparty’s credit worthiness and other risks. We can require prepayment or collateral to mitigate credit risks.

We group our financial assets into pools of counterparties with similar risk characteristics for the purpose of determining the allowance for expected credit losses. Each reporting period, we assess whether a significant change in the risk of expected credit loss has occurred. Among the quantitative and qualitative factors considered in calculating our allowance for expected credit losses are historical financial data, including write-offs and allowances, current conditions, industry risk and current credit ratings. Financial assets will be written off in whole, or in part, when practical recovery efforts have been exhausted and no reasonable expectation of recovery exists. Subsequent recoveries of amounts previously written off are recorded as an increase to the allowance. We manage receivable pools using past due balances as a key credit quality indicator.

The following table summarizes changes in our expected credit loss allowance for accounts receivable - trade for the periods indicated:


	Year Ended March 31,
	2022		2021		2020 (1)
	(in thousands)
Balance at beginning of year	$	2,192	$	4,540	$	4,016
Cumulative effect adjustment	—		433		—
Change in provision for expected credit losses	929		319		1,202
Write-offs charged against the provision	(491)		(3,100)		(678)
Disposition of Sawtooth (See Note 17)	(4)		—		—
Balance at end of year	$	2,626	$	2,192	$	4,540

(1) We adopted ASU 2016-13 as of April 1, 2020. The allowance reported for the year ended March 31, 2020 has not been changed from its previous presentation.

The following table summarizes changes in our expected credit loss allowance for notes receivable and other for the periods indicated:


	Year Ended March 31,
	2022		2021 (1)
	(in thousands)
Balance at beginning of year	$	458	$	—
Cumulative effect adjustment	—		680

Write-offs charged against the provision	—		(222)
Balance at end of year	$	458	$	458

(1) We adopted ASU 2016-13 as of April 1, 2020. An allowance had not been established for notes receivable and other prior to the adoption of ASU 2016-13.

In addition to the provision for expected credit losses above, we also wrote off $5.7 million during the year ended March 31, 2021 as discussed in Note 17.