FASB delays CECL for CUs until 2023
The Financial Accounting Standards Board voted on July 17 to extend the deadline for conversion to the Current Expected Credit Loss methodology to January 2023 for all but the nation’s biggest publicly traded banks.
CECL is used as shorthand for the new GAAP requirement to include expected life of loan (LOL) losses in the allowance for loan and lease losses (ALLL), versus the current incurred loss model. Generally, loss estimates will increase, be more volatile, and require subjective assumptions. Therefore, processes must be enhanced and well-documented to ensure future compliance as new CECL models and data requirements go into effect.
Prior to the vote, “smaller publicly traded banks that aren’t registered with the SEC were scheduled to convert to CECL on Jan. 22, followed a year later by privately held banks and credit unions.” Read more at CU Journal.