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Commentary

Concerns Abound Over FASB’s Credit Losses Proposal

The costs of the proposed accounting update far outweigh the benefits for credit unions.

By Alexander Monterrubio | Updated on April 13, 2016
Credit unions will likely begin implementing the Financial Accounting Standards Board’s current expected credit loss standard in December 2019. But the industry still does not yet know exactly what it will be implementing. 

Though the alterations to the draft, unveiled during the FASB’s Transition Resource Group for Credit Losses meeting on April 1, are a step in the right direction, more could be done to address the concerns of credit unions.

Under the CECL standard, the allowance for loan and lease losses would reflect a credit union’s current estimate of the contractual cash flows that it doesn’t expect to collect. This estimate would be based upon management’s expectations after considering past events, current conditions, and reasonable and supportable forecasts.

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