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In an updated insight post on NAFCU’s CFO Network, Regulatory Affairs Counsel James Akin provides credit unions with an update on the NCUA’s CECL transition final rule, announced June of last year. The rule previously created a three-year phase-in of the day-one adverse impacts of the current expected credit loss (CECL) accounting standard on a federally-insured credit union’s (FICU) net worth ratio.

The NCUA’s rule formerly noted that the phase-in was only available to FICUs that adopted the CECL standard for fiscal years beginning on or after December 15, 2022, and early adopters are not eligible. Akin warned that the prohibition on early adoption presented a problem for the many credit unions that operate on a non-calendar fiscal year. If a credit union’s fiscal year ended on a date other than December 31st, they would be prohibited from utilizing the three-year phase-in.

Last week, the NCUA announced that credit unions with non-calendar year fiscal years can adopt CECL at the beginning of their first fiscal year end following December, 15 2022, while still obtaining the three-year phase-in relief on their net worth ratio. The agency also mentioned they would be issuing an Account Update in the near future to codify this NAFCU-sought guidance.

NAFCU will continue to work with the NCUA to ensure their policies have a positive impact for credit unions.

Read the insight post and engage with other credit unions and NAFCU staff. For more information, reach out to James Akin at jakin@nafcu.org. Learn more about the NAFCU Networks.