WASHINGTON—Federal financial regulators, including NCUA, have issued a final interagency policy statement to provide clarification and consistency in the interpretation and application of the Financial Accounting Standards Board's (FASB) current expected credit loss (CECL) standard.
The final policy statement describes the measurement of expected credit losses using the CECL methodology and provides updates to the practices detailed in existing guidance that will remain applicable when implementing the CECL standard. The statement becomes effective at the time of each institution’s implementation.
“Although the final policy statement does not address capital requirements – even though many called for further guidance in comments on the proposed interagency policy statement – the NCUA is considering a rulemaking that will address the potential impact to regulatory net worth,” NAFCU noted in its analysis.
In addition, the group of financial regulators, which includes the Fed, FDIC and the Office of the Comptroller of the Currency, finalized interagency guidance on credit risk review systems and presented principles for establishing a system of independent, ongoing credit risk review.
FASB has approved a delay of the CECL standard that will push compliance to 2023 for credit unions last year.