CUNA requested clarification on the effective date of the Financial Accounting Standards Board’s (FASB) current expected credit losses (CECL) standard in a letter sent Tuesday. CUNA supported the recommendation of the American Institute of Certified Public Accountants (AICPA), who submitted a paper to FASB staff regarding the effective date of CECL for non-public business entities (PBEs), which include state and federal chartered credit unions.
The standard, adopted in June 2016, uses an “expected loss” measurement for the recognition of credit losses. CUNA supports FASB’s intent of tiered effective dates to allow smaller and less complex financial institutions time and flexibility to implement the new CECL standard.
As indicated in the standard, FASB appears to have sought to provide additional implementation time for non-PBEs.
“Both [non-PBEs and certain PBEs] need to determine the transition entry as of the beginning of the first quarter of fiscal years beginning after December 15, 2020—which is January 1, 2021, for calendar year-ends,” the letter reads. “We concur with the AICPA that the adoption during the fourth quarter does not effectively result in a different adoption date between non-SEC filer PBEs and non-PBEs, given the need to have appropriate reporting systems and internal controls as of January 1, 2021.”
CUNA advocacy efforts led to several positive changes in the final CECL standard. CUNA continues to work with FASB and the National Credit Union Administration on credit union compliance issues related to the new standard.