Removing Barriers Blog

FASB Issues Standard Aimed at Transition Relief
Posted May 16, 2019 by CUNA Advocacy

Yesterday, FASB issued an Accounting Standards Update (ASU) intended to ease transition to the CECL credit losses standard by providing the option to measure certain types of assets at fair value.

Some stakeholders—including auto financing institutions that extend credit to borrowers with limited or impaired credit histories—noted that if they elect to measure certain assets at fair value, CECL would require they also measure those assets at amortized cost. The ASU allows preparers to irrevocably elect the fair value option for eligible financial assets measured at amortized cost basis upon adoption of CECL.

While we support true relief associated with CECL, regardless of who it benefits, based on discussions with our member credit unions, it is our understanding that credit unions are unlikely to benefit from the transition relief provided by the ASU. CUNA sent a letter to FASB during the proposal’s comment period in which we reiterated our longstanding position that application of CECL to credit unions is inappropriate. We also asked FASB to review the CECL standard for opportunities to reduce unnecessary compliance challenges as well as develop compliance resources in coordination with the prudential banking regulators, including NCUA.