CUNA: CECL ‘inappropriate’ for CUs, future relief needed
Application of the current expected credit losses (CECL) standard to credit unions continues to be inappropriate, CUNA wrote to the House Financial Services subcommittee on financial institutions and consumer credit Tuesday. The subcommittee conducted a hearing Tuesday on the impact of the standard, which was set forth by the Financial Accounting Standards Board (FASB).
“CECL is intended to address delayed recognition of credit losses resulting in insufficient funding of the allowance accounts of certain covered entities. However, underfunding of allowance accounts has not generally been an issue for credit unions,” the letter reads. “Further, the typical user of a credit union’s financial statements is not a public investor—such as with large, public banks—but instead is the credit union’s prudential regulator, the NCUA.”
CECL was adopted in 2016, uses an “expected loss” measurement for the recognition of credit losses. FASB recently finalized a CUNA-backed delay in implementation to give credit unions and other entities more time to come into compliance.
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