Today Credit Union National Association (CUNA) a letter in support of FASB’s proposed delay of the effective date of CECL (along with two other accounting standards).
In response to concerns related to implementation of standards, FASB has proposed a philosophy to extend and simplify how effective dates are staggered between larger public companies and all other entities. Under this philosophy, a major accounting standard update would first be effective for large public companies, followed by at least a two year delay for all other entities. CUNA supports this proposed philosophy as it would apply to major accounting standard updates. Given the challenge credit unions and other non-public entities encounter when implementing major accounting changes, CUNA believes it is important that a delayed effective date for smaller entities be formalized into FASB’s standards. Providing non-public entities additional time over large public companies will provide entities with limited resources the ability to learn from the implementation processes of those entities with vast resources.
CUNA supports the proposed delay of the effective dates for the CECL, leases, and hedging accounting standards, as such changes would be consistent with the Board’s proposed new effective date philosophy. However, CUNA’s longstanding position has been and continues to be that application of CECL to credit unions is inappropriate. CECL is intended to address delayed recognition of credit losses resulting in insufficient funding of the allowance accounts of certain covered entities.
CUNA maintains that CECL will hinder lenders’ (including credit unions) ability to uplift low- and moderate-income borrowers in their goal of achieving financial independence and the American dream. A completely unintended, though real, consequence of CECL is that it will force lenders to be much more discerning of potential borrowers with less than perfect credit.
You can read more on CUNA News. Should you haver further questions I’d be happy to arrange a time to speak with CUNA Senior Director of Advocacy & Counsel Luke Martone.