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Opportunity to Voice Concerns to FASB in Effort to Improve Proposal on Credit Losses

Credit unions in Missouri are urged to share their input with the Credit Union National Association (CUNA) as it develops a comment letter to the Financial Accounting Standards Board (FASB) about its proposal regarding financial reporting of expected credit losses on loans and other financial assets.

The proposed model would utilize a single “expected loss” measurement for the recognition of credit losses. This would replace the multiple existing impairment models in U.S. generally accepted accounting principles (GAAP) that primarily use an “incurred loss” approach.

Credit unions have voiced concerns regarding the potential impact of this proposal, including that it could cause as much as a doubling of an entity’s credit impairment allowance. In addition, there is concern that the proposed “expected loss”  approach would require use of speculative forecasting of the performance of an asset over the remainder of the asset’s life.

The Missouri Credit Union Association is working on a comment letter regarding this issue.  As CUNA continues to develop their comment letter to FASB, see CUNA's Comment Call and send your credit union's input on the proposal by April 8.