CUNA attended the Financial Accounting Standards Board’s (FASB) public roundtable meeting in Norwalk, Conn. Monday, which featured a discussion of the board’s current expected credit loss (CECL) standard. CUNA has called on FASB to take opportunities for additional feedback on implementation of the standard, and thus appreciates FASB taking the time to host a roundtable on the subject.
CECL uses an “expected loss” measurement for the recognition of credit losses. CUNA believes the standard itself will have an effect on credit unions’ financial positions, and will bring additional compliance burdens.
Monday’s meeting provided a forum for FASB to gather additional views on the credit losses standard. In addition to Doug Wright, CFO Mission FCU, roundtable participants included representatives of banks of various sizes, regulators, including NCUA, and users of financial statements. The meeting focused on discussion of a proposal submitted by a group of banks to consider an alternative to the income statement impact of the CECL model. Based on the discussion, it is apparent there are a number of pros and cons to the industry proposal. FASB staff indicated it will provide a comprehensive analysis of today’s meeting to the Board later this quarter.
FASB has also stated it has been working with financial services regulators to develop educational initiatives to inform all financial institutions (especially credit unions and community banks) about the standard’s flexibility and scalability.
According to FASB, this collaboration is also intended to address other misunderstandings of CECL. An example of a misunderstanding mentioned was that credit unions are concerned that the standard would require them to hire outside consultants to help them procure necessary data.
The meeting also included FASB staff addressing several recent technical inquiries about the standard.