CUNA called on NCUA to do more to prepare credit unions for the current expected credit loss (CECL) standard in a letter to Chair J. Mark McWatters sent Tuesday. The letter echoes CUNA’s request during a June 2018 meeting that NCUA increase its focus on implementation of CECL.
Finalized in June 2016, CECL requires use of an “expected loss” model, a significant change in how entities will account for credit losses. CUNA is concerned with both its effect on financial standing of credit unions and the compliance burden it is already presenting.
“We have heard from credit unions in every asset size category that CECL remains a top concern to them,” wrote CUNA President/CEO Jim Nussle. “However, some have not yet elevated CECL preparation to a top priority simply because of a lack of information and understanding of how the standard will change current practices and how to begin implementing necessary changes.”
The letter notes a joint webinar conducted last year by the Federal Deposit Insurance Corporation and Federal Reserve Board focusing on how smaller, less complex financial institutions can implement CECL, and suggests NCUA could use that webinar as a model.
“The CECL effective date for credit unions and other non-public business entities (PBE) is not until fiscal years beginning after December 15, 2021,” Nussle wrote. “While this may appear to some to be far off, when you consider the amount of work required to adopt necessary changes—even if using a vendor—it is much closer than many credit unions may realize.”
Nussle added that CUNA is ready and willing to assist with these efforts in any way it can.