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Update to Interagency Policy Statement on Allowances for Credit Losses

23-CU-04 / April 2023
Update to Interagency Policy Statement on Allowances for Credit Losses
Federally Insured Credit Unions
Federally Insured Credit Unions
Update to Interagency Policy Statement on Allowances for Credit Losses

Dear Boards of Directors and Chief Executive Officers:

Enclosed is a revised Interagency Policy Statement on Allowances for Credit Losses. The revision removes references to Troubled Debt Restructurings (TDRs). This policy statement describes the measurement of expected credit losses in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 326 and includes processes for the design, documentation, and validation of expected credit losses. The policy statement also addresses internal controls over these processes, the maintenance of appropriate allowances for credit losses, the responsibilities of boards of directors and management, as well as examiner reviews of allowances for credit losses. This policy statement is effective at the time of each credit union’s adoption of FASB ASC Topic 326.

The NCUA collaborated with the U.S. Department of the Treasury’s Office of Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation to revise the Interagency Policy Statement on Allowances for Credit Losses to conform with changes to U.S. generally accepted accounting principles.

In March 2022, FASB issued Accounting Standards Update 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.” This update eliminates the recognition and measurement accounting guidance for TDRs by creditors.

When the agencies adopted the original statement, FASB’s accounting guidance on recognition and measurement of TDRs by creditors was still in effect, and the original policy statement included numerous references to TDRs. To comply with U.S. generally accepted accounting principles, the agencies revised the original statement to remove references to TDRs. No other substantive changes are being made to the original statement.

If you have any questions, please contact the Office of Examination and Insurance at or 703.518.6360.



Todd M. Harper


Current Expected Credit Losses (CECL)
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