Compliance Center: Regulators Release Interagency FAQ on CECL

The NCUA, along with other financial institution regulators developed and released a joint bulletin in the form of frequently asked questions about the new accounting standard for the current expected credit losses methodology (CECL) for estimating allowances for credit losses.

The frequently asked questions to intended to assist financial institutions and examiners with the new accounting standard, Accounting Standards Update 2016-13, Topic 326, “Financial Instruments – Credit Losses,” issued by the Financial Accounting Standards Board (FASB) on June 16, 2016.

Some of the highlights of the FAQ include:

  • Summarizing key elements of the new accounting standard, focusing on such concepts as:
    • Effective dates;
    • Scope;
    • Transition;
    • Measurement approaches.
  • Highlighting areas within existing U.S. generally accepted accounting principles that will change with the new accounting standard, including:
    • Purchased credit-deteriorated financial assets;
    • Held-to-maturity debt securities;
    • Available-for-sale debt securities;
    • Troubled debt restructuring;
    • Off-balance-sheet credit exposures.
  • Discussing initial supervisory views with respect to measurement methods, portfolio segmentation, use of vendors, scalability, data needs, and allowance processes.
  • Outlining certain steps that financial institutions are encouraged to take to prepare for the transition to the new accounting standard.

Compliance Question of the Week

If initial disclosures are silent on skip payments, does the credit union have to provide the disclosure for skip payments on closed-end loans if a fee is charged?

No, Regulation Z does not require subsequent disclosures for skip payments on closed-end loans. Generally, the only time new Truth in Lending (TIL) disclosures are required for closed-end loans is if a refinancing occurs. This is because the existing obligation is replaced by a new obligation for the same consumer. If the existing agreement is only being modified, no new disclosures are required.

Related Links:

12 CFR 1026.20

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Questions? Contact the Compliance Hotline: 1.800.546.4465,

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