Friday was the first meeting of FASB’s Transition Resource Group, which is focused on improving FASB’s pending changes to its credit impairment standard, also referred to as CECL (current expected credit losses). As reflected in the material from Friday’s meeting, the proposal’s revised language provides additional flexibility, stating that there is no one methodology that entities must use. FASB’s intent is that each institution apply the method that is appropriate for its portfolio based on the knowledge of its business and processes.

Credit unions are represented on the Group by two CUNA members, Susan Hannigan, CFO at Jeanne D’Arc CU in Lowell, MA, and Doug Wright, CFO at Mission FCU in San Diego. Following last week’s meeting, Hannigan noted that the revisions are “progress toward a workable solution.” By allowing community financial institutions to evaluate and adjust their loan-loss amounts using qualitative factors, historical losses, and current systems, such as spreadsheets and narratives, FASB has made important changes to its proposed accounting standard.

These proposed changes come less than a month after CUNA’s latest advocacy efforts to improve the standard. In mid-March, CUNA teamed up with the Community Bankers of America (ICBA) to send a detailed letter to FASB Chairman Russell Golden expressing concerns and providing suggestions to improve the proposal. Also in March, CUNA initiated its Grassroots Action Center to urge credit unions to contact Golden directly with their concerns, resulting in roughly 1,000 individual letters sent to the standard-setter.

FASB expects to finalize its credit impairment standard by the middle of this year.