It’s a “prudent course” to delay to 2023 the “current expected credit loss” (CECL) standard for small reporting companies – such as credit unions – the board chairman of the federal credit union regulator said Thursday, following news from the previous day that the accounting standards-setting body is ready to do just that.
In a release, NCUA Board Chairman Rodney Hood said delaying the effective date for the smaller filers – including small reporting companies (as defined by the SEC), private companies and non-SEC public companies (including credit unions) – will give more time for credit unions to implement the standard.
The delay was agreed to Wednesday by the Financial Accounting Standards Board (FASB), the industry’s standards-setting body. A formal vote of the board must still be taken to complete the action. Currently, the effective date for the accounting standard – which aims to provide timelier financial reporting of credit losses on loans and other financial instruments held by financial institutions (including credit unions) and other organizations – is Dec. 15, 2021, for most credit unions (credit unions would not need to begin reporting data on call reports until the beginning of 2022).
“The NCUA plans to phase in the capital impact of the new standard, which will provide relief to credit unions that could see large increases in their loan-loss reserves,” Hood said, adding the agency will work with FASB to help credit unions obtain necessary education and training assistance to implement the new standard.