By: Thomas Griswold | CUNA Council
Credit unions have been discussing FASB’s decision to move to the CECL standard as a replacement for the current accounting methodology of allowance for loan and lease losses (ALLL) and other than temporary impairment (OTTI) over the past year. Recently, FASB granted a one-year extension for confirmed credit unions and non-public business entities to implement CECL. Currently, credit unions do not need to implement CECL until the fiscal year following December 15, 2021 (effectively January 1, 2022). This additional year gives all credit unions additional opportunity to ensure appropriate data can be collected for projecting losses and the appropriate CECL model is selected.
Step 1: Collecting the Data
One of the most important, resource-constraining tasks needed to develop a well-informed loss model is data collection. Creating an efficient data collection process can require significant human hours and potentially burdensome costs…