The Financial Accounting Standards Board Wednesday agreed to a CUNA-supported update to the current expected credit loss (CECL) standard. CECL is an accounting standard that recognizes lifetime expected credit losses.
The update eliminates Troubled Debt Restructuring (TDR) accounting requirements for entities upon adoption of the CECL standard, which CUNA supported in a December comment letter to FASB.
“We thank FASB for moving to eliminate the TDR designation, which we believe will no longer be meaningful after the adoption of CECL, as it already accounts for lifetime credit losses,” said CUNA President/CEO Jim Nussle.
The update also requires more detailed disclosure about modifications of receivables made to borrowers experiencing financial difficulty.
Credit unions are required to comply with CECL for fiscal years beginning after Dec. 15, 2022. FASB discussed a potential delay of the standard at Wednesday’s meeting but voted against it.