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NAFCU urges FASB to accelerate TDR elimination date
NAFCU Regulatory Affairs Counsel James Akin last Thursday sent a letter to the Financial Accounting Standards Board (FASB) sharing the association’s response to the Proposed Accounting Standards Board Update, eliminating accounting guidance for troubled debt restructurings (TDR) and enhancing certain disclosure requirements.
While NAFCU generally supports FASB’s proposal to eliminate the accounting guidance for TDRs, the association strongly urges FASB to “accelerate the effective date of TDR elimination as optional for non-public entities as early as the annual period beginning after December 15, 2021,” wrote Akin. Non-public entities have successfully maintained sufficient loan loss allowance levels without TDR accounting guidance and will likely be able to continue doing so moving forward.
Akin also discusses the redundancy of TDR accounting guidance, sharing financial institutions’ track records of success in voluntarily disclosing information in the absence of TDR guidance during the pandemic. Regarding the current expected credit losses (CECL), NAFCU urges FASB to eliminate the adoption of CECL, citing major credit union concerns with the accounting standard. The association has previously called on FASB to exempt all non-public filers, including credit unions, from compliance with the CECL standard.
NAFCU also supports the adoption of narrowly tailored disclosures that provide meaningful information to users of financial statements without introducing unnecessary cost and burdensome complexity to the accounting process.
NAFCU continues to encourage FASB to eliminate TDR guidance and will keep credit unions updated on the process. Read the full letter here.