CECL Delay Formally Proposed; FASB Is Seeking Comment
Credit union trade groups have vehemently argued that they should not be subject to CECL at all.
The Financial Accounting Standards Board on Thursday formally proposed pushing back the effective date for credit union compliance with the Current Expected Loss Standard (CECL) for another year–to January 2023.
The board will accept comment on the proposal until Sep. 16.
FASB Chairman Russell Golden said that stakeholders have told the board that they would benefit from additional time to prepare for CECL.
“This represents an important shift in the FASB’s philosophy around effective dates, one we believe will support better overall implementation of these standards,” he said, as the agency published the new proposed deadlines for companies, including no-for-profit organizations, such as credit unions.
However, credit union trade groups have vehemently argued that they should not be subject to CECL at all.
Under the CECL standard, institutions will have to recognize the expected lifetime losses at the time a loan or financial instrument is recorded.
“On the basis of feedback obtained from outreach with stakeholders and monitoring of implementation, the Board has gained a greater understanding about the implementation challenges encountered by all types of entities when adopting a major Update,” FASB said, in setting the deadline for comment. “The challenges are often magnified for private companies, smaller public companies, and not-for-profit organizations.”
Lawmakers in both houses have introduced legislation that would prohibit FASB from implementing CECL until one year after the financial regulators, including the NCUA, submit a study to the board.
FASB said Thursday that the board’s evaluation of the costs and benefits of new guidance is “unavoidably more qualitative than quantitative” because there is no method to objectively measure the implementation costs or to quantify the value of improved information in financial statements.