FASB discusses implementation of CECL standard

On Monday, the Financial Accounting Standards Board held a roundtable in Norwalk, Conn., at which they discussed the current expected credit loss (CECL) standard. The meeting provided a forum for FASB to gather additional views on the credit losses standard.

CECL uses an “expected loss” measurement for the recognition of credit losses. CUNA believes the standard itself will affect credit unions’ financial positions and bring additional compliance burdens.

In addition to Doug Wright, CFO Mission FCU, roundtable participants included representatives of banks of various sizes, regulators such as NCUA, and users of financial statements. The meeting focused on discussion of a proposal submitted by banks to consider an alternative to the income statement impact of the CECL model. FASB staff also addressed several recent technical inquiries about the standard.

Based on the discussions, CUNA said there are pros and cons to the industry proposal.

FASB staff indicated they will provide a comprehensive analysis of the meeting to the Board later this quarter. They also stated FASB has been working with financial services regulators to develop educational initiatives to inform all financial institutions (especially credit unions and community banks) about the standard’s flexibility and scalability.

According to FASB, this collaboration is also intended to address other misunderstandings of CECL. An example of a misunderstanding mentioned was that credit unions are concerned that the standard would require them to hire outside consultants to help them procure necessary data.

Source: CUNA