WASHINGTON—The Financial Accounting Standards Board (FASB) has issued a final update to clarify the effective date for its current expected credit loss (CECL) standard.
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, noted NAFCU.
The final update makes clear the implementation of the standard for non-public business entities (PBEs) is only required for fiscal years after Dec. 15, 2021. As a result, credit unions would not need to begin reporting data on call reports until the beginning of 2022. The update also clarifies that operating lease receivables are not covered within the scope of CECL – noted NAFCU, which said it welcomed the clarification.
NAFCU said it also continues to urge the FASB to coordinate with the NCUA on guidance and recently sent a letter to the NCUA outlining NAFCU's efforts to help address credit unions' CECL concerns and encouraged the agency to work with FASB "to reduce burdens on credit unions and alleviate industry uncertainty."