“We are concerned that a significant depletion of credit union regulatory capital could occur as part of a transition to an expected credit loss accounting methodology even though these credit unions' underlying economic credit risk exposures would not have changed and their total amount of reserves and allowances held to protect the institution and its members against losses would not have changed as an economic matter,” Edwards said in the letter to the London-based IASB.

The World Council proposed the IASB modify its final version to retain the incurred loss approach, especially with respect to small, community financial institutions. Additionally, the council suggested the IASB could allow a transitional period for the phase-in of the new standard that would allow credit unions sufficient time to build up additional loan loss reserves.

Other alternative ideas floated by the World Council include not requiring the discounting of expected future cash flows at the credit-adjusted effective interest rate, and allowing regulators to establish their own credit loss methodologies for small financial institutions, especially for those in developing countries or with limited staff resources.

The IASB's comment period on its proposed credit loss changes closed July 5. According to a statement Tuesday from Fitch Ratings, after IASB members agree upon a final draft, the standard would have to be implemented through European Union and other national legislation, which means the new accounting standards aren't likely to be required for a few years.