This Accounting Alert supersedes the alert issued March 9, 2022.
After issuing the March 9, 2022 Accounting Alert, the NCUA determined that the term “fiscal year” - as used in the Current Expected Credit Losses (CECL) Transition Rule (opens new window) - should not be interpreted to mean “calendar year.” While the Federal Credit Union Act (12 U.S.C. § 1760) (opens new window) requires all federal credit unions to have a fiscal year ending on [the calendar year-end] December 31, the Financial Accounting Standards Board (FASB) enables an audit to be conducted on a different financial reporting year-end, such as September 30, 2023. This Accounting Alert provides notice that a federal credit union may implement CECL based on its audited financial reporting year if different than its fiscal year.
As a reminder, on February 2, 2022, FASB decided not to defer the implementation date for nonpublic entities of the Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326), commonly known as CECL. Federal credit unions and federally insured state-chartered credit unions are nonpublic entities; thus, CECL becomes effective for credit unions for fiscal years beginning after December 15, 2022.
In practice, a credit union with a financial statement reporting year ending on September 30, 2023, will implement CECL on October 1, 2023. Under the NCUA’s CECL Transition Rule (opens new window), the phase-in of the day-one effects on a credit union’s net worth ratio would also start on October 1, 2023.
Federally insured state-chartered credit unions may contact their accountant or state regulator with questions on the implementation of CECL.
For additional information on CECL, please visit our CECL Resources Page.
Contact EIMail@ncua.gov with questions not answered in the CECL Resources.
Sent July 20, 2022, via GovDelivery