Written by Alexander Monterrubio, Regulatory Affairs Counsel
Last week, the Financial Accounting Standards Board (FASB) announced in its quarterly “FASB Outlook” that it plans to issue a final Accounting Standards Update (ASU) governing the measurement of credit losses towards the end of the second quarter of 2016. For those of you following along at home, the FASB initially expected the Current Expected Credit Loss (CECL) accounting standard to be issued during the... third quarter of 2015.
Apparently, the large number of substantive projects currently awaiting approval by the Board has caused a bottle neck in the FASB’s agenda. Despite this delay, the FASB has been inching toward the finalization of CECL for months now and credit unions should make sure they are adequately prepared.
As a reminder, under the CECL standard, the allowance for loan and lease losses (ALLL) would reflect the credit union’s current estimate of the contractual cash flows that it doesn’t expect to collect. This estimate would be based on management’s expectations after considering past events, current conditions, and reasonable and supportable forecasts.
In November 2015, the FASB voted to adopt a staggered implementation of CECL based on the type of entity. For credit unions and other non-public business organizations, the implementation dates are fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.
NAFCU will continue to monitor this issue and raise credit unions concerns at every available opportunity.
Stay tuned… again.
NCUA January Board Meeting Agenda
During NCUA’s Board meeting tomorrow, the Board will consider the following matters: 1) Final Rule, Part 790.2(b), Office of Minority and Women Inclusion Reporting Structure; 2) NCUA’s 2017 – 2021 Strategic Plan; 3) Overhead Transfer Rate Methodology; and 4) Federal Credit Union Operating Fee Methodology. NCUA’s agenda can be found here.
NAFCU’s compliance team will be sure to more thoroughly blog about these issues and more in the near future.