NEWS: Credit unions with assets of $10 million or more must implement the current expected credit losses (CECL) accounting standard in 2023. For most credit unions, the implementation date was January 1, 2023. For federally insured state-chartered credit unions that have a non-calendar fiscal year, CECL will become effective on the first day after the end of your fiscal year in 2023. Credit unions with total assets less than $10 million do not have to comply with CECL.
Back in September, 2022, the NCUA developed the Simplified CECL tool, along with FAQs, to assist credit unions with developing their allowance for credit losses on loans and leases as we mentioned in this Compliance Courier. Yesterday, NCUA released updates to its CECL GAAP FAQs and its Simplified CECL Tool FAQs to address such topics as day-one adjustment to undivided earnings, CECL implementation date, monthly use of the CECL tool, negative loss rate, and loans to be individually evaluated, to name a few.
You can find the latest version of the CECL Tool on the NCUA’s Simplified CECL Tool page. ”To better understand how the tool can work for your credit union,” please review the Frequently Asked Questions, User Guide, and Model Development Document located on the same webpage. For additional information on CECL, visit NCUA’s CECL Resources page. For those credit unions looking for a CECL policy, PolicyAid’s new sample CECL Policy is now available via the League’s website.