FASB heeds CUs’ CECL concerns; NAFCU urges coordination with NCUA

by NAFCU Newsroom

Noting credit unions’ concerns about operational challenges related to the current expected credit loss (CECL) standard, the Financial Accounting Standards Board (FASB) recently agreed to proceed with NAFCU-sought changes, including a delay in the standard’s effective date for the industry.

The CECL accounting standard requires financial institutions – including credit unions – to record expected losses whenever they make a new loan. This is causing concern within the industry as it could mean financial institutions may have to either raise more capital or lend less.

The FASB-supported changes would make clear that the implementation of the standard for non-public business entities (PBEs) is only required for fiscal years after Dec. 15, 2021 – so credit unions would not need to begin reporting data on call reports until the beginning of 2022 – and would also clarify that operating lease receivables are not covered within the scope of CECL – a clarification welcomed by NAFCU. A final update is expected to be issued before the end of the year.

 

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