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The Financial Accounting Standards Board (FASB) Thursday issued a proposed accounting standards update to make technical corrections to its current expected credit loss (CECL) standard. It would permit organizations to record negative allowances on purchased financial assets with credit deterioration (PCD).

The issue was raised during stakeholder meeting earlier this month. The proposal would also reinforce existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities.

Comments on the proposal are due July 29; instructions on submitting comments are available on the proposed update.

NAFCU recommends that credit unions begin preparing to comply with CECL, which credit unions will need to start reporting in 2022. At the association's Annual Conference last week, NCUA Chief Accountant Alison Clark provided an update on the standard and the NCUA's supervisory expectations (read more here).