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As the Financial Accounting Standards Board (FASB) continues deliberating on the new Current Expected Credit Loss (CECL) guidelines, credit union professionals are left wondering how the changes will impact their organizations. Final guidance on the FASB’s CECL model is expected to be released this year, therefore, credit unions should begin to seek information and plan for the transition.

In response to the recent International Accounting Standards Board (IASB) guidance, the Basel Committee on Banking Supervision (BCBS) released a consultative document on accounting for ECL in early February. The guidance notes that the objective “is intended to set forth supervisory requirements for ECL accounting that do not contradict the applicable accounting standards established by the IASB or other standard setters (such as the FASB)…the requirements described are equally applicable under all accounting frameworks.” The guidance provides a framework for both financial institutions and regulators with respect to implementing expected credit loss models. Although the current guidance is for international financial institutions, many U.S. institutions view the document as a “piece of the puzzle” in deciphering what the CECL model will mean for them.

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