The NCUA, along with other federal financial regulators, has posted a frequently asked questions (FAQ) document on the current expected credit loss (CECL) standard. CUNA has called on NCUA to provide credit unions with resources on CECL, which is a new accounting standard for estimating allowances for credit losses.
CECL will apply to all credit unions, banks, savings associations and financial institution holding companies for which the reporting requirements conform to U.S. generally accepted accounting principles (GAAP).
The notice makes clear that until CECL becomes effective, credit unions (and other institutions) must continue to follow current U.S. GAAP on impairment and the allowance for loan and lease losses (ALLL). Existing ALLL policy statements and guidance will not be rescinded until CECL is effective for all institutions.
For credit unions, considered non-public business entities (PBEs) under the standard, CECL is effective for fiscal years beginning after Dec. 15, 2021 including interim periods within those fiscal years.
For a non-PBE with a calendar year fiscal year, the standard is effective Jan. 1, 2022 with the application of CECL methodology applied in its financial statements and Call Reports for the quarter ended March 21, 2022.
According to the agencies, the FAQs are designed to assist institutions and examiners. The agencies plan to issue proposed supervisory guidance on allowance for credit losses under CECL before the first mandatory effective date for the new accounting standard.
The regulators have issued FAQs in December 2016 and September 2017. This document updates several questions from previous versions and adds nine question-and-answer sets.
Registration is also still open for an April 11 webinar on CECL conducted by financial regulators.