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The Financial Accounting Standards Board (FASB) officially issued its proposal making several CUNA-backed changes to its current expected credit loss (CECL) standard. The board agreed to issue the proposal in July at its meeting, and comments will be due Sept. 19.
CECL was adopted in June 2016, and uses an “expected loss” measurement for the recognition of credit losses. CUNA urged FASB in a letter to clarify CECL’s effective date for credit unions, and the FASB Chairman Russell Golden agreed with CUNA’s comments during the July meeting.
While FASB appears to have sought to provide additional implementation time for non-public business entities (PBE), the standard as originally issued effectively required non-PBEs to adopt the standard at the same time. State and federal chartered credit unions are considered non-PBEs.
The proposal would mitigate transition complexity by requiring non-PBEs implement CECL for fiscal years beginning after Dec. 15, 2021, including interim periods within those fiscal years.
This would align the implementation date for their annual financial statements with the implementation date for their interim financial statements.