CECL: FASB Hosted Roundtable Discussion; NCUA Standards for CUs
in Compliance & Regulatory
By: Nicola Foggie, NJCUL Senior Vice President, Compliance and Regulatory Affairs

The Financial Accounting Standards Board’s (FASB) held a roundtable discussion on the Current Expected Credit Loss (CECL) issues Jan. 28.

FASB discussed expected CECL standard, impact and issues. Missed the live event? It is not too late to register to access the video and printable materials. The video will be available January 30. The FASB event was intended to provide stakeholders with an opportunity to discuss issues with the CECL standards, and staff presented research into some issues previously raised. FASB also discussed consideration of transition issues. CECL was adopted in 2016 and uses an “expected loss” measurement for the recognition of credit losses. FASB recently finalized a delay in implementation to give credit unions and other entities more time to come into compliance. FASB has also published a CECL Q & A document to address ongoing implementation issues, including information on use of the WARM (weighted average remaining maturity) methodology.

The National Credit Union Administration (NCUA) addressed CECL requirements in its release of its Supervisory Examination Priorities for 2019 letter to credit unions where the agency stated it “may continue to evolve in 2019, examiners will inquire about efforts a credit union has taken to prepare for the new accounting standard, and whether a credit union has performed analysis for how CECL would alter the Allowance for Loan and Lease Losses funding needs. In June 2016, the Financial Accounting Standards Board (FASB) issued the new accounting standard introducing the current expected credit losses methodology for estimating allowances for credit losses, with an effective date of January 1, 2022 for most credit unions.  For more information about this topic, see NCUA Letter to Credit Unions 17-CU-05, Frequently Asked Questions on the New Accounting Standard on Financial Instruments - Credit Losses and NCUA Letter to Credit Unions 16-CU-13, Frequently Asked Questions on the New Accounting Standard on Financial Instruments - Credit Losses”.