WASHINGTON—With NCUA saying credit union’s preparedness for the Financial Accounting Standards Board’s (FASB) current expected credit loss model (CECL) is a supervisory priority in 2019, the agency now has an AIRES examination questionnaire on CECL preparedness available as an Excel file.
CECL is a new accounting standard that changes the accounting for credit losses, recognizing lifetime expected credit losses instead of the current “incurred-loss” approach.
The questionnaire features nine questions currently being used by examiners to assess credit union management's understanding of CECL and its preparedness for implementation. Any information obtained through the questionnaire will not result in administrative actions, findings or DORs – but only through 2020, CUNA explained.
The Nine Questions
The nine questions are:
- Has management reviewed or otherwise familiarized itself with the CECL accounting standard?
- Has management reviewed or otherwise familiarized itself with the June 17, 2016 joint statement on the CECL standard and the interagency frequently asked questions and answers (last updated April 3, 2019) on the new credit losses accounting standard?
- Has management established an implementation plan and/or timeline?
- Has management discussed CECL implementation with the auditor of the credit union's financial statements?
- Has management identified which functional department areas within the credit union will be involved with implementing the new standard and established a cross-functional implementation committee?
- Has management begun retaining data used in its current allowance for loan and lease losses methodology(ies), including any related data stored by third-party service providers?
- Does management plan to engage a third-party vendor solution to perform their CECL estimate?
- Has management determined the impact of CECL on capital?
- Summarize management’s comments if the choices above do not adequately capture management’s comments or if additional or clarifying information is necessary to adequately reflect management’s progress.