Removing Barriers Blog

FASB Seeks Comment on CUNA-Advocated for CECL Change
Posted August 20, 2018 by CUNA Advocacy

As reported in the Removing Barriers Blog, at its July Board meeting, FASB agreed to propose a change regarding the effective date of the CECL (current expected credit losses) standard as it applies to credit unions and other non-Public Business Entities (non-PBE). This is a change CUNA explicitly pushed for in a May letter to FASB.

The CECL standard provides tiered effective dates depending on the classification of the reporting entity: (A) SEC-registered PBEs; (B) non-SEC-registered PBEs; and (C) non-PBEs, which includes credit unions. FASB intended to provide additional implementation time for non-PBEs. However, the standard as issued effectively requires non-PBEs to adopt the standard at the same time as non-SEC-registered PBEs. The proposed change will remedy this by providing credit unions (and other non-PBEs) additional time over PBEs.

Today, FASB released the official proposal. According to FASB, the proposal specifically would:

“First, the proposed ASU [Accounting Standards Update] would mitigate transition complexity by requiring entities other than public business entities to implement it for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. This would align the implementation date for their annual financial statements with the implementation date for their interim financial statements. Second, the proposed ASU would clarify that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard.”

CUNA is reviewing the proposal and will be commenting on both of the proposed changes prior to the September 19 comment deadline.