The Financial Services Accounting Board (FASB) approved Wednesday several CUNA-backed changes to its current expected credit losses (CECL) standard. CUNA strongly advocated FASB extend the implementation date for credit unions and the board proposed the change earlier this year.
The board agreed to the changes during its regular open meeting. Following a formal board vote, FASB staff will incorporate the changes into the accounting standard, which should be finalized and made public in mid to late fourth quarter.
CECL, adopted in June 2016, uses an “expected loss” measurement for the recognition of credit losses.
The changes agreed to Wednesday amend the effective date of the standard for non-public business entities (PBEs), changing it to fiscal years beginning after Dec. 15, 2021, and including interim periods within those years. As originally adopted, for non-PBEs, the standard would have become effective fiscal years beginning after Dec. 15, 2020, and interim periods within fiscal years beginning after Dec. 15, 2021.
Both state and federally chartered credit unions are considered non-PBEs.
The change in effective date will not only provide much needed additional time for credit unions to implement system updates but will also reduce confusion, particularly for those entities required to adopt in the fourth quarter.
CUNA’s comment letter also called for FASB to examine options to provide credit unions relief from the proposal, and CUNA will continue to work with FASB and the NCUA to alleviate CECL’s impact on credit unions.
Read more about a Complete CECL Solution through a partnership with LEVERAGE.