NAFCU to gain CECL insights at resource group meeting
NAFCU’s Andrew Morris today will attend the Financial Accounting Standards Board’s (FASB) Transition Resource Group for Credit Losses to gain insights on issues that might arise when companies and organizations implement the current expected credit loss (CECL) standard. FASB recently agreed to proceed to a vote to finalize 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.
Last week, the FASB agreed to hold a ballot vote and issue a final update that 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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