The NCUA released a final interagency policy statement on June 1 that outlines allowances for credit losses, commonly referred to as ACLs. The statement from NCUA, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency was issued in response to changes to generally accepted accounting principles as promulgated by the Financial Accounting Standards Board.
The statement clarifies:
- the measurement of expected credit losses under the CECL methodology and the accounting for impairment on available-for-sale debt securities in accordance with FASB ASC Topic 326;
- the design, documentation, and validation of expected credit loss estimation processes, including the internal controls over these processes;
- the maintenance of appropriate ACLs; and
- the responsibilities of boards of directors and management; and examiner reviews of ACLs.
The statement can be accessed in the Federal Register.