CUNA recognized the improvements proposed by the Financial Accounting Standards Board (FASB) in its current expected credit losses (CECL) standard, CUNA wrote to the board Monday. CUNA’s comment letter was sent in response to a FASB proposal that would make several CUNA-backed changes to the standard, a proposal that CUNA understands was at least in part due to a May letter from CUNA raising concerns.
CECL was adopted in June 2016, and uses an “expected loss” measurement for the recognition of credit losses. The proposal would amend the effective date of the standard for non-public business entities (PBEs), changing it to fiscal years beginning after Dec. 15, 2021, and including interim periods within those years.
Both state and federally chartered credit unions are considered non-PBEs.
“We agree with the Board’s proposed change to the effective date for non-PBEs,” CUNA’s letter reads. “We believe this change will not only provide much needed additional time for credit unions to implement system updates but will also reduce confusion, particularly for those entities required to adopt in the fourth quarter.”
CUNA’s letter also noted ongoing compliance burden with the CECL changes and the resources credit unions must expend to analyze portfolios to calculate and project life of loan losses.
“We share these ongoing concerns in hope that FASB will take advantage of future opportunities to adjust the standard with an eye toward reducing the compliance burden on credit unions,” the letter reads. “Though the standard has been finalized, we are encouraged by FASB’s apparent willingness to revise the standard as issues present themselves. As credit unions continue devoting resources to make changes necessary for compliance, it is certain that opportunities for improvement and/or clarification will arise.”
The letter was written in conjunction with CUNA’s Accounting Advisory Committee, which is chaired by Julie Renderos, executive vice president/CFO of Suncoast CU, Tampa, Fla.