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New NAFCU Network insight post highlights the latest on TDR elimination
In a new insight post on NAFCU’s Compliance, Risk, & BSA Network, CFO’s Network; and ONES + CFPB Supervision Network, NAFCU Regulatory Affairs Counsel James Akin covers the elimination of troubled debt restructuring (TDR) account guidance. FASB recently announced a unanimous vote to draft a final update eliminating TDR accounting guidance for creditors who have adopted the current expected credit loss (CECL) standard, with an effective date of Dec. 15, 2022 during its board meeting this month.
In the post, Akin breaks down how the TDR elimination will affect both credit unions who have and have not yet adopted CECL, as well as credit unions with under $10 million in assets. Elimination of TDR accounting guidance should “provide welcome relief to credit unions that have dealt with the relatively low impact of TDRs on allowances for credit losses and the outsized burden imposed by high preparer costs,” wrote Akin.
NAFCU previously requested that FASB allow early adoption of TDR elimination for entities regardless of whether or not they implement CECL, however, the Board voted to make early adoption only available to entities that have implemented CECL. The association also called on FASB to eliminate the adoption of CECL, citing major credit union concerns with the accounting standard.
The association has worked with FASB and the NCUA to provide additional resources to credit unions and has remained alert on any future developments related to CECL. NAFCU continues to engage FASB as the effective elimination date of TDR accounting guidance approaches to ensure credit unions are prepared for the transition.
NAFCU-member credit union professionals that are part of the complimentary network can engage in a conversation on this topic through the post. Comments and questions regarding the elimination of TDR accounting guidance can also be submitted to NAFCU Regulatory Affairs Counsel James Akin at jakin@nafcu.org.