WASHINGTON—During its meeting this week the Financial Accounting Standards Board (FASB) unanimously voted to draft a final update eliminating troubled debt restructuring (TDR) accounting guidance for creditors who have adopted the current expected credit loss (CECL) standard, with an effective date of Dec. 15, 2022.
Following the meeting, NAFCU noted it had requested that FASB allow early adoption of TDR guidance for all entities, regardless of CECL status. FASB, however, voted to make early adoption available only to entities that have adopted CECL. Of note, one board member stated that TDR elimination and CECL adoption represent a "quid pro quo,” NAFCU reported.
In addition, the board also voted to adopt enhanced disclosure requirements that make several clarifying changes to the scope of the disclosures.
One-Year Deferral
On CECL deferral, the board voted 6-1 to neither defer for one year nor indefinitely defer the effective date of CECL implementation for non-public filers. The board stated that their reasoning for voting against a deferral include feedback from prudential regulators indicating that institutions will be ready by the January 2023 mandatory CECL implementation date, as well as concerns with establishing two different accounting standards for public and non-public entities.
The lone dissenting board member noted that he was persuaded to exempt nonpublic entities after hearing the credit union perspective, as well as NCUA Board Member Hood’s warning that the “costs of CECL on credit unions overwhelmingly exceed the benefits.”
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