The Financial Accounting Standards Board (FASB) released its long-awaited final standard on credit losses Thursday, and it includes CUNA-backed improvements that make it more manageable for credit unions. CUNA will be closely analyzing the standard with its Accounting Advisory Committee in the coming weeks.
“Based on our initial look at the final standard, it appears that the hard work of CUNA and our member credit unions helped bring about the final version of the standard that will make compliance much more manageable to credit unions,” said Elizabeth Eurgubian, CUNA’s deputy chief advocacy officer. “While we continue to disagree with FASB’s decision to apply the new standard to credit unions, we recognize that the final standard reflects input provided to the FASB Board and staff by CUNA and the credit union industry.”
Referred to as the current expected credit loss (CECL) standard, it uses an “expected loss” measurement for the recognition of credit losses, which replaces the various existing impairment models in U.S. generally accepted accounting principles that generally use an “incurred loss” approach.
Two CUNA members are part of FASB’s CECL transition resource group. Susan Hannigan, senior vice president/chief financial officer at Jeanne D’Arc CU, Lowell, Mass., and Doug Wright, chief financial officer at Mission FCU, San Diego, helped bring the credit union perspective to FASB over the last few months.
CUNA-suggested improvements present in the final standard include:
CUNA’s Removing Barriers Blog takes a closer look at the final standard, and will contain more information as CUNA’s analysis continues.