Jan. 15, 2013 – NAFCU is analyzing a Financial Accounting Standards Board proposal that would replace current impairment models, which focus on incurred credit events, to one that factors in potential credit risk for its impact on credit unions.
The proposal would, FASB says, provide financial statement users with more decision-useful information about expected credit losses on financial assets and other commitments to extend credit. It would affect all entities that hold financial assets that are not accounted for at fair value through net income; and which are exposed to potential credit risk.
FASB has been working with the International Accounting Standards Board through the Financial Crisis Advisory Group created in 2008 in response to the global financial crisis. The group recommended looking at alternatives to the current, incurred-loss model of accounting for credit losses.
The proposal would apply to all entities held to generally accepted accounting principles.
NAFCU is drafting a Regulatory Alert seeking members’ input on this FASB exposure draft. FASB is taking comments on the proposal until April 30.