FOR IMMEDIATE RELEASE
March 5, 2019
Credit Union National Association (CUNA) filed a comment letter with the Financial Accounting Standards Board (FASB) regarding its Targeted Transition Relief proposal that is intended to ease transition to the credit losses standard (CECL) by providing the option to measure certain types of assets at fair value. CUNA urged FASB that the proposed changes to the current CECL standard are unlikely to be adopted by credit unions and recommended exploring other ways relief for credit unions can be achieved.
The proposal would allow preparers to irrevocably elect the fair value option for eligible financial assets measured at amortized cost basis upon adoption of CECL. CUNA agrees with FASB that the proposed change is likely to increase the comparability of financial statement information provided by institutions that otherwise would have reported similar financial instruments using different measurement methodologies, potentially decreasing costs for those financial statement preparers while providing more useful information to investors and other users.
CUNA’s letter reiterates its longstanding position that the application of CECL to credit unions is inappropriate.
“CECL is intended to address delayed recognition of credit losses resulting in insufficient funding of the allowance accounts of certain covered entities. However, underfunding of allowance accounts has not generally been an issue for credit unions. Further, the typical user of a credit union’s financial statements is not a public investor—such as with large, public banks—but instead is the credit union’s prudential regulator, the National Credit Union Administration.”
As credit unions continue to struggle with implementing the “expected loss” measurement for the recognition of credit losses, CUNA is concerned with both its effect on financial standing of credit unions and the compliance burden it is already presenting.
Read the letter in full here.
Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 115 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit cuna.org. To find your nearest credit union, visit YourMoneyFurther.com.