adminMike Lee, LSCU director of regulatory advocacy, is reaching out to credit union staff with strong accounting backgrounds for input on questions regarding the Interagency Policy Statement on Allowances for Credit Losses and the Interagency Guidance on Credit Risk Review Systems. Mike is gathering information for a comment letter to NCUA regarding this matter related to the implementation of CECL.
“It’s important that accounting professionals provide their input for the impact these changes will have on the credit union industry,” said Mike. “By providing input to financial regulators, we are insuring they understand the effects this will have on our industry, limiting the negative impacts these changes will have on credit unions and members.”
Interagency Policy Statement on Allowances for Credit Losses:
1. Does the proposed interagency policy statement clearly describe the measurement of expected credit losses under CECL in accordance with FASB ASC Topic 326? Why or why not? If not, what additional information is needed? What information should be omitted from the policy statement?
2. Does the proposed interagency policy statement clearly describe the measurement of credit losses on impaired AFS debt securities in accordance with FASB ASC Topic 326? Why or why not? If not, what additional information is needed? What information should be omitted from the policy statement?
3. Does the proposed interagency policy statement clearly communicate supervisory expectations for designing, documenting, and validating expected credit loss estimation processes, internal controls over ACLs, and maintaining appropriate ACLs?
4. Has the proposed interagency policy statement appropriately included concepts and practices detailed in the existing ALLL policy statements that also are relevant under FASB ASC Topic 326? If not, what additional information should also be included?
Interagency Guidance on Credit Risk Review Systems
1. To what extent does the proposed credit review guidance reflect current sound practices for an institution’s credit risk review activities? What elements should be added or removed, and why?
2. To what extent is the proposed credit review guidance appropriate for institutions of all asset sizes? What elements should be added or removed for institutions of differing sizes, and why?
3. What if any additional factors should the agencies consider incorporating into the guidance to help achieve a sufficient degree of independence and why? To what extent does the approach described for small or rural institutions with fewer resources or employees provide for an appropriate degree of independence in the credit review function? What, if any, modifications should the agencies consider and why?
If you have input on these issues, please contact Mike by email or phone: michael.lee@lscu.coop or 866.231.0545, ext. 2165
