CUNA seeks prioritized NCUA help for CECL execution
CUNA President/CEO Jim Nussle is seeking assurance from NCUA that it will make it a priority to assist credit unions with implementation of the new current expected credit loss (CECL) accounting standard. Finalized earlier this month by the Financial Accounting Standards Board (FASB), the standard uses an “expected loss” measurement for the recognition of credit losses.
While far from perfect, the final standard contains a number of CUNA-suggested improvements that will ease compliance for credit unions. NCUA, along with other federal agencies, issued initial supervisory views after FASB finalized the standard.
“While the statement indicates that the agencies will be developing implementation guidance, we ask NCUA to detail its plans for developing guidance specific to credit unions,” Nussle wrote in a letter sent last week. “The statement notes that the agencies will be ‘especially mindful of the needs of smaller and less complex institutions when developing supervisory guidance describing the expectations for an appropriate and comprehensive implementation of this standard.’ We look forward to NCUA guidance that is wholly consistent with this remark."
CUNA also asked NCUA to develop a public framework of how it will assist credit unions as they begin to prepare for implementation of the standard. This framework should include a timeline of when the agency will release detailed compliance resources.
“Further, we urge the agency to establish an implementation task force, comprised of accounting experts from credit unions of all asset sizes from across the country," Nussel wrote. "This task force will be crucial in ensuring NCUA has a comprehensive understanding of the ongoing issues credit unions are dealing with as they prepare to comply. "
CUNA offers its assistance to NCUA in recommending credit union experts to participate in the task force.
Nussle also reiterated concerns CUNA expressed to NCUA in June 2015 about the CECL standard.
“We continue to believe that, while the proposal will in no way change today’s economic reality, it will result in lower apparent capital ratios at credit unions and banks,” Nussle wrote. “Therefore, we urge NCUA to work with its Office of Examination and Insurance to instruct examiners to make the appropriate adjustments in assessments of capital adequacy in order to minimize the negative impact on credit unions.”