WASHINGTON—Proposed changes to the current expected credit loss (CECL) standard are unlikely to be adopted by credit unions, said CUNA, which urged the
Financial Accounting Standards Board (FASB) to explore ways relief for credit unions can be achieved.
CUNA’s letter was sent in response to a “Targeted Transition Relief” proposal intended to ease transition to the CECL standard.
CECL uses an “expected loss” measurement for the recognition of credit losses. CUNA said it is concerned with both its effect on financial standing of credit unions and the compliance burden it is already presenting.
CUNA’s letter reiterates its “longstanding” position that the application of CECL to credit unions is inappropriate.
“CECL is intended to address delayed recognition of credit losses resulting in insufficient funding of the allowance accounts of certain covered entities. However, underfunding of allowance accounts has not generally been an issue for credit unions. Further, the typical user of a credit union’s financial statements is not a public investor—such as with large, public banks—but instead is the credit union’s prudential regulator, the National Credit Union Administration.”
Review Urged
CUNA called on FASB to review the standard for “opportunities to reduce unnecessary compliance challenges as well as develop compliance resources in coordination with prudential banking regulators, including the NCUA.”
CUNA President/CEO Jim Nussle wrote to NCUA Chairman J. Mark McWatters in February to urge NCUA to help prepare credit unions for implementation of the standard.