CUNA was an active voice as the proposed Current Expected Credit Losses (CECL) standard moved from proposal to final form, bringing concerns and questions about the standard to the Financial Accounting Standards Board (FASB) throughout the process.

While CUNA hoped the final standard would exempt credit unions completely, several victories for credit unions are present in the final standard.

First, the final standard delays the effective date by a year from the date tentatively agreed to during the deliberation process. The impairment standard will be effective for credit unions for annual periods beginning after Dec. 15, 2020, and interim periods within fiscal years beginning after Dec. 15, 2021.

CUNA urged FASB to provide credit unions with at least three years (from issuance of a final standard) to comply with the changes.

Another major improvement is the additional flexibility the standard affords covered entities. Specifically, the changes will not require complex modeling and will allow for various estimation methods.

FASB’s intent is for each institution to apply the method that is appropriate for its portfolio based on the knowledge of its business and processes.

CUNA specifically pushed for this improvement in a March 2016 letter.

In addition, CUNA successfully urged NCUA to issue resources to help credit unions comply with the new standard.

A FAQ document federal financial regulators issued in December includes a summary of the new standard’s effective dates, scope, transition, and measurement approaches.

The FAQ document also outlines steps financial institutions should take to prepare for the transition to the new accounting standard.