WASHINGTON (5/29/13)--Credit unions and other interested parties have until this Friday to comment on a Financial Accounting Standards Board (FASB) proposal that could substantially increase the credit impairment allowance for credit unions.
Under an accounting standards update regarding financial reporting of expected credit losses on loans and other financial assets held by financial institutions, including credit unions, FASB proposed a model that would utilize a single "expected loss" measurement for the recognition of credit losses. That model would replace the multiple existing impairment models in U.S. generally accepted accounting principles that generally use an "incurred loss" approach.
Under the proposal, the reporting entity would be required to estimate the cash flows that it does not expect to collect, using all available information, including historical experience and forecasts about the future.
CUNA is developing a comprehensive letter to FASB strongly opposing the proposal and issued a Comment Call to credit unions in January.
Use the resource link to access the Comment Call, which includes a detailed summary of the FASB plan.