Federal financial regulators have updated the current expected credit loss (CECL) standard’s frequently asked questions (FAQ) document, assisting institutions and examiners in clarifying CECL resources.
The Credit Union National Association (CUNA) has called on the National Credit Union Administration (NCUA) to provide credit unions with resources on CECL – a new accounting standard for estimating allowances for credit losses applicable to all credit unions, banks, savings associations and financial institution holding companies for which the reporting requirements conform to generally accepted accounting principles (GAAP).
While regulators issued FAQs in December 2016 and September 2017, the latest document updates several questions from previous versions and adds nine question-and-answer sets. The notice states that until CECL becomes effective, credit unions and other institutions must continue to follow current GAAP on impairment, as well as the allowance for loan and lease losses (ALLL) and existing ALLL policy statements and guidance will not be rescinded until CECL is effective for all institutions.
With regard to non-public business entities (PBEs) with a calendar year fiscal year, officials outlined the standard is effective Jan. 1, 2022, with the application of CECL methodology applied in its financial statements and Call Reports for the quarter ended March 21, 2022.