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Accounting and Auditing Update

TRAVIS SMITH, CPA, CGMA

Moss Adams Presenter

Travis Smith, CPA, CGMAPartner National Credit Union [email protected]

Travis has practiced public accounting since 1996 and is a member of the firm’s National Credit Union Practice. For over 20 years, he has served hundreds of financial services companies across the United States and is a frequent presenter at conferences. Travis has extensive experience with complex investments, fair value, derivatives, hedging activities, and routinely works with regulators from all agencies. He is a member of the firm’s Financial Services Steering Committee and leads the Scottsdale office’s Financial Services Group. He is also a member of the Arizona Society of Certified Public Accountants and the American Institute of Certified Public Accountants. Travis earned a BA in accounting from the University of Washington.

Disclaimer

The material appearing in this presentation is for informational purposes only and should not be construed as advice of any kind, including, without limitation, legal, accounting, or investment advice. This information is not intended to create, and receipt does not constitute, a legal relationship, including, but not limited to, an accountant‐client relationship. Although this information may have been prepared by professionals, it should not be used as a substitute for professional services. If legal, accounting, investment, or other professional advice is required, the services of a professional should be sought. Content is not all inclusive.

Leases

ASU No. 2016‐02, Leases(Topic 842)

Why Change?

FASB has said:• Lessees

• Most leases are off‐balance‐sheet• Disclosures provide only limited information about operating leases

• Lessors• Lack of transparency about residual values• Consistency with lessee proposal and revenue recognition proposal

$1.25 trillionOf off‐balance‐sheet operating lease commitments for SEC registrants* * Estimate according to the 2005 SEC report on off‐balance‐sheet activities

Right‐of‐Use Model

Lease: A contract, or part of contract, that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Does the Contract Contain a Lease?

• Explicitly or implicitly identify leased asset• Supplier has no practicable ability to substitute and would not economically benefit from substitution

IDENTIFIED ASSETS

RIGHT TO CONTROL

• Decision‐making authority to direct the use of the identified asset

• Ability to obtain substantially all of the economic benefit from the use of the asset

Implementation Guidance

ASC 842‐10‐55‐1

Flowchart depicting how to determine whether a contract is or contains a lease.

FASB’s Dual Model

Right‐of‐use assetLease liability

Amortization expense

Interest expense

Financing cash flow for principal Operating cash flow for all other

Right‐of‐use assetLease liability (not debt)

Single lease expense on a straight‐line basis

Operating cash flow for all lease payments

Balance Sheet Income Statement Cash Flows

Finance

Operating

Recognition and measurement option for short‐term leases.

Lease Term

Assessment of reasonably certain to consider all factors

Lessee’s options to purchase, extend, or terminate the lease

when reasonably certain

Lessor’s options to extend (or not terminate the lease)

Classification & Measurement

• Assess at lease commencement and reassess only upon changes that are in lessee’s control

• Factors to consider:

– Contract has penalty for failure to renew

– Asset is critical to operations– Entity performed significant

integration– Below market option

Financial Statement Presentation

Operating Lease

Gross presentation of ROU assets and lease liabilities for operating and finance leases (comingling prohibited)

Finance Lease

Single SL lease expense Front‐loaded interest andSL amortization expense

Operating cash flow classification for all payments

Financing and operating cash flow classification

Operating lease liability isn’t debt

Footnote Disclosures

Quantitative

Periodic lease expense, ROU asset amortization, interest costs

Qualitative

Terms and conditions, purchase options and termination penalties

Residual value guarantees

Accounting policy elections, areas of significant judgment, assumptions

Short‐term, variable leases, sublease income, cash and non‐cash flows

Significant judgments & assumptions

Weighted average discount rate for both finance & operating

Weighted average remaining lease term for both finance & operating

Effective Dates

Non‐Public

How Will the Change Impact An Organization?

• Policy elections to be made• Current capabilities and system resources may not be

sufficient to identify and capture all leases to apply new standard

• Internal and external financial reporting metrics may need to be revised to account for changes in balance sheet and income statement classification

• Accounting for book‐tax differences going forward• Impact on borrowers and related debt covenants

How Will the Change Impact An Organization?

• Gross up of the balance sheet• Impact to regulatory capital ratios• Balance sheet geography

• Increased assets• Lower return on assets

• Earnings• Finance lease – reduced earnings up front• Operating lease – no impact

Leases ‐ Items to consider . . . Identify project leader and availability of resources within your

organization to manage the transition process Evaluate whether controls and processes are properly designed and

implemented across all functional areas (IT, legal, procurement, treasury, accounting) including new reassessment processes

Consider benefits of lease accounting software solutions to manage lease accounting and reporting vs. traditional spreadsheets

Review contracts to ensure all leases and relevant terms have been identified and properly accounted for

Communicate expectations both internally and to key external stakeholders

Consider regulatory and tax implications Consider change in strategy for lease vs. buy

Financial Instruments

ASU No. 2016‐01, Financial Instruments – Overall (Subtopic 825‐120): Recognition and Measurement

of Financial Assets and Financial Liabilities


• Key elements of the new rule include:• Eliminates the available‐for‐sale classification for equity securities

and contains a new requirement to carry those equity securities with readily determinable fair values at fair value through net income (FV‐NI)

• Practicability exception from fair value accounting to equity securities that do not have readily determinable fair values

• Assesses the need for a valuation allowance for a deferred tax asset related to an available‐for‐sale debt security

• Requires an exit price notion for those items disclosed at fair value (rather than entrance value) – eliminates practicability exception


• Key elements of the new rule include:• Record changes in instrument‐specific credit risk for own financial

liabilities measured under the fair value option in other comprehensive income (not through net income)

• Eliminates disclosure requirements for Non‐PBEs for financial instruments measured at amortized cost (AKA “the FAS 107 table”)

• Generally, an entity will record a cumulative effect adjustment to beginning retained earnings as of the beginning of the first reporting period in which the guidance is adopted

Financial InstrumentsEffective date:

• Public entities: annual periods beginning after December 15, 2017, and interim periods therein.

• All other entities: annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

• Non‐PBEs can early adopt the standard as of the effective date for PBEs.

• All entities can early adopt a provision that eliminates the fair value disclosures carried at amortized cost and a provision requiring them to recognize the fair value change from own credit provision that eliminates the fair value disclosures for financial instruments not recognized at fair value – as of annual or interim periods for financial statements that have not been issued, including 2015.

Business Combinations

ASU No. 2017‐01, Business Combinations (Topic 805): Clarifying

the Definition of a Business


• Amendment adds a screen that will reduce the number of transactions that need to be further evaluated

• If the screen is not met, the amendment in this update:• Require that to be considered a business, a set of assets and

activities must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output

• Remove the evaluation of whether a market participant could replace missing elements

• Provides a framework to assist entities in evaluating whether both an input and a substantive process are present


• Effective date:• Nonpublic entities: Periods ending after December 15, 2018• Early adoption permitted

Intangibles – Goodwill and Other

ASU No. 2017‐04, Intangibles – Goodwill and Other (Topic 350): Simplifying the

Test of Goodwill Impairment


• Eliminates step two from the goodwill impairment test• Impairment test is to be performed by comparing the fair

value of the reporting unit to its carrying amount (Step 1 only)

• May result in recording impairment charges sooner than under current GAAP


• Effective date:• Nonpublic entities: Periods ending after December 15, 2021• Early adoption permitted for interim or annual goodwill impairment

tests performed on testing dates after January 1, 2017

Receivables‐Nonrefundable Fees and Other Costs

ASU No. 2017‐08, Receivables‐Nonrefundable Fees and Other Costs (Subtopic 310‐20): Premium

Amortization on Purchased Callable Debt Securities

Receivables‐Nonrefundable Fees and Other Costs• Shortens the amortization period for certain callable debt

securities held at a premium• Premiums will now be amortized to the earliest call date• Does not change accounting for securities held at a

discount

Receivables‐Nonrefundable Fees and Other Costs• Effective date:

• Nonpublic entities: Periods ending after December 15, 2019• Early adoption permitted

Statement of Cash Flows

ASU No. 2016‐15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments

ASU No. 2016‐18, Statement of Cash Flows(Topic 230): Restricted Cash

Statement of Cash Flows (ASU 2016‐15)• Changes to Cash Flow :

• Debt prepayment or debt extinguishment costs• Cash payments should be classified as cash outflows for financing activities.

• Settlement of zero‐coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing

• The issuer should classify the portion of the cash payment attributable to the accreted interest related to the debt discount as cash outflows for operating activities, and the portion of the cash payment attributable to the principal as cash outflows for financing activities.

• Contingent consideration payments made after a business combination• Cash payments not made soon after the acquisition date of a business combination by an acquirer to settle a

contingent consideration liability should be separated and classified as cash outflows for financing activities and operating activities.

• Cash payments up to the amount of the contingent consideration liability recognized at the acquisition date (including measurement‐period adjustments) should be classified as financing activities; any excess should be classified as operating activities.

• Cash payments made soon after the acquisition date of a business combination by an acquirer to settle a contingent consideration liability should be classified as cash outflows for investing activities.

• Proceeds from the settlement of issuance claims• Cash proceeds received from the settlement of insurance claims should be classified on the basis of the related

insurance coverage (that is, the nature of the loss). For insurance proceeds that are received in a lump sum settlement, an entity should determine the classification on the basis of the nature of each loss included in the settlement.

Statement of Cash Flows (ASU 2016‐15)(Continued)

• Proceeds from the settlement of Corporate Owned Life Insurance, including Bank‐Owned Life Insurance policies

• Cash proceeds received from the settlement of corporate‐owned life insurance policies should be classified as cash inflows from investing activities.

• The cash payments for premiums on corporate‐owned policies may be classified as cash outflows for investing activities, operating activities, or a combination of investing and operating activities.

• Distributions received from equity method investees• When a reporting entity applies the equity method, it should make an accounting policy election to classify

distributions received from equity method investees using either of the following approaches:• Cumulative earnings approach: Distributions received are considered returns on investment and classified

as cash inflows from operating activities, unless the investor’s cumulative distributions received less distributions received in prior periods that were determined to be returns of investment exceed cumulative equity in earnings recognized by the investor. When such an excess occurs, the current‐period distribution up to this excess should be considered a return of investment and classified as cash inflows from investing activities.

• Nature of the distribution approach: Distributions received should be classified on the basis of the nature of the activity or activities of the investee that generated the distribution as either a return on investment (classified as cash inflows from operating activities) or a return of investment (classified as cash inflows from investing activities) when such information is available to the investor.

Statement of Cash Flows (ASU 2016‐15)(Continued)

• Beneficial interests in securitization transactions• A transferor’s beneficial interest obtained in a securitization of financial assets should be

disclosed as a noncash activity, and cash receipts from payments on a transferor’s beneficial interests in securitized trade receivables should be classified as cash inflows from investing activities.

• Separately identifiable cash flows and application of the predominance principle• The classification of cash receipts and payments that have aspects of more than one class

of cash flows should be determined first by applying specific guidance in generally accepted accounting principles (GAAP). In the absence of specific guidance, an entity should determine each separately identifiable source or use within the cash receipts and cash payments on the basis of the nature of the underlying cash flows. An entity should then classify each separately identifiable source or use within the cash receipts and payments on the basis of their nature in financing, investing, or operating activities. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item.

Statement of Cash Flows (ASU 2016‐15)

• Effective date:• Nonpublic entities: Periods ending after December 15, 2018• Early adoption permitted


• Cash Flow Issues addressed:• Diversity exists in the classification and presentation of changes in

restricted cash on the statement of cash flows• Entities classify transfers between cash and restricted cash as

operating, investing, or financing activities, or as a combination of those activities, in the statement of cash flows.

• Entities present direct cash receipts into, and direct cash payments made from, a bank account that holds restricted cash as cash inflows and cash outflows, while others disclose those cash flows as noncash investing or financing activities.

Statement of Cash Flows (ASU 2016‐18)• Changes to cash flow presentation:

• The ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.

• Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning‐of‐period and end‐of‐period total amounts shown on the statement of cash flows.

• Disclosure• An entity shall disclose information about the nature of restrictions on its cash, cash equivalents,

and amounts generally described as restricted cash or restricted cash equivalents. • When cash, cash equivalents, and amounts generally described as restricted cash or restricted

cash equivalents are presented in more than one line item within the statement of financial position, present on the face of the statement of cash flows or disclose in the footnotes the line items and amounts of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents reported within the statement of financial position that totals the total amount of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents at the end of the corresponding period shown in the statement of cash flows.

• This disclosure may be provided in either a narrative or a tabular format.


• Effective date:• Nonpublic entities: Periods ending after December 15, 2018• Early adoption permitted• The amendments in this Update should be applied using a

retrospective transition method to each period presented.

Revenue Recognition

ASU No. 2015‐14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective

ASU No. 2014‐09, Revenue from Contracts with Customers (Topic 606)

Revenue Recognition

• Effective date of ASU No. 2014‐09, Revenue from Contracts with Customers (Topic 606)• Private entities: Effective for annual reporting periods beginning

after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019

Revenue RecognitionTransition

• Effective January 2019 for private entities (early adoption allowed)Option 1: Full Retrospective

•Follow current guidance in 2018• In 2019, recast 2018 to new guidance (January 1, 2018, cumulative effect adjustment date)

Option 2: Modified Retrospective•Follow current guidance in 2018•For 2019, present new guidance (January 1, 2019, cumulative effect adjustment date)

•Comparative disclosure of 2019 – new vs. old• Cumulative effect adjustment requires evaluation of open/unsatisfied contracts that carry over in 2018 or 2019, respectively, depending on transition approach

Revenue Recognition

• AICPA Task Forces• Also evaluating standard• Formed 16 industry task forces for application examples of the

standard• Three banking industry focused:

• Asset Management• Broker Dealers• Depository Institutions• https://www.aicpa.org/InterestAreas/FRC/AccountingFinancialReporting/RevenueRecognition/Pages/RRTF‐DepositoryInst.aspx

Potential revenue recognition implementation issues identified by the Depository and Lending Institutions Revenue Recognition Task Force

REVENUE RECOGNITION

Financial Instruments – Credit Losses

ASU No. 2016‐13, Financial Instruments ‐ Credit Losses (Topic 326)

CECL – Effective Dates

The FASB decided to defer the originally planned effective dates by one year to the following:

1. For all non PBE entities, including not‐for‐profit organizations and employee benefit plans, the forthcoming standard will be effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.

2. Early adoption will be permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

Scope:

Includes financing receivables (Loans) and HTM debt securities, lease receivables, loan commitments, guarantees, and other items; AFS securities guidance was separately amended.

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THE ULTIMATE LOSS DOESN’T CHANGE – JUST THE TIMING OF RECOGNITION

• Estimate of contractual amounts that an entity does not expect to collect over the contractual life When determining the contractual life of the asset:

— Consider expected prepayments— Do not consider extensions, renewals, and modifications unless entity “reasonably expects”

to execute a TDR Assets should be pooled when similar risk characteristics exist; otherwise assess individually Management’s expectations should consider all relevant internal and external information

including:— Past events— Current conditions— Reasonable and supportable forecasts (how far in the future?)

Revert to historical loss average experience for future periods beyond which the entity is able to make reasonable and supportable forecasts— Can adjust historical losses for borrower specific factors

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Measuring Current Expected Credit Losses

OTHER ITEMS OF INTEREST • The estimate of expected credit losses should be a “best estimate” but must not be a best case

scenario (or worst case) and must always reflect the risk of loss, even when that risk is remote, however: Not required to recognize a loss on a financial asset in which the risk of default is greater than zero yet the

amount of loss would be zero In practice, Treasuries and GSE’s likely to meet this definition

• Collateral dependent financial assets – practical expedient (fair value less costs to sell)• TDRs remain – follow CECL guidance • Purchase Credit Deteriorated – follow “gross‐up” accounting model • AFS Debt Securities – revised accounting model – bifurcate credit and interest rate mark; reserve

for credit • New disclosures (vintage and qualitative discussion) • Business combinations: (ASC 805‐20‐30‐4A) “For acquired financial assets that are not purchased financial assets with credit

deterioration, the acquirer shall record the purchased financial assets at the acquisition‐date fair value. Additionally, for these financial assets within the scope of Topic 326, an allowance shall be recorded with a corresponding charge to credit loss expense as of the reporting date.”

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Measuring Current Expected Credit Losses (continued…)

Modeling and Implementation Challenges

• Potential models used in forecasting: Historical loss rate approach Discounted cash flow Provision matrices Risk Migration (pooling – open vs. closed) Static Pool/Vintage PD/LGD Regression Analysis (18 different models) Combinations of the above…

Remember: many of these models are designed to analyze the past, in order to assist you in forecasting future expected credit losses; the models themselves don’t give you the future losses.

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Modeling Options/Strategies

• Your Data Data fields available, frequency of updating, “connectivity” of the data, and overall history available

Regression requires approximately 30 to 40 data point observations and no gaps in data, no zeros and no “$” signs

Have you updated data fields along the way (and lost historical info)? Do you have multiple data sets in a single data field? What historical data do you have from your mergers? PD/LGD doesn’t really work without collateral values Bad data quality requires more correlation/forecasting Be very careful with using risk ratings in your CECL modeling – may be too subjective/qualitative and diverge from your segmentation that will likely be more useful

• External Data Accuracy, timeliness, availability (national vs. regional vs. local)

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Needs/Challenges Related to Models

• Segmentation Term loans (fixed vs. variable); balloon, interest only, lines of credit, credit cards Further segmentation by credit metrics (DSC/liquidity/past due status); rate tiers;

possibly geography? Credit quality indicators are key to segmentation! • Calculating Your Historical Losses What is an appropriate period/method?

• Life of Loan/Prepayments If you want to use a 7 year life for a 10‐year term loan, do you think you will be able to

arbitrarily assign that shorter life? NO! If you don’t have life of loan data, determining a life other than the contractual term will

be a challenge. What’s the life of a credit card? 1 month or 10 years? How does your renewal process

impact the life? • Reasonable & Supportable Forecasts What does this look like? Are you going to forecast over the life of the asset, or a shorter

period?

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Needs/Challenges Related to Models (continued…)

Aggregate CRE Base Case Change in Loan Mix; no Change in Loss Rates

Loan Historical Expected Loan Historical Expected

Balance Loss Rate Losses Balance Loss Rate Losses

CRE ‐ total 4,750 0.56% 26.50 4,500 0.56% 25.20

C & I 1,250 0.85% 10.63 1,400 0.85% 11.90

Residential 850 0.25% 2.13 850 0.25% 2.13

Consumer 150 2.50% 3.75 250 2.50% 6.25

7,000 0.61% 43.00 7,000 0.65% 45.48

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Segmentation Matters

+2.48

More Detailed CRE Base Case Same Change in Loan Mix; no Change in Loss Rates

Loan Historical Expected Loan Historical Expected

Balance Loss Rate Losses Balance Loss Rate Losses

CRE ‐ construction 500 1.15% 5.75 250 1.15% 2.88

CRE ‐ owner occupied 2,000 0.40% 8.00 3,000 0.40% 12.00

CRE ‐ non‐owner occupied 1,500 0.55% 8.25 1,000 0.55% 5.50

CRE ‐ other 750 0.60% 4.50 250 0.60% 1.50

CRE ‐ total 4,750 0.56% 26.50 4,500 0.49% 21.88

C & I 1,250 0.85% 10.63 1,400 0.85% 11.90

Residential 850 0.25% 2.13 850 0.25% 2.13

Consumer 150 2.50% 3.75 250 2.50% 6.25

7,000 0.61% 43.00 7,000 0.60% 42.15

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Segmentation Matters (continued…)

(0.85)

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Calculating Your Historical Losses Calculating Your Historical Losses

COMPARING ANNUAL LOSS RATES TO "LIFE OF LOAN" LOSS RATES

CHARGE‐OFF PERCENTAGES

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 TOTALSOrigination

Year

2000 0.13% 0.15% 0.21% 0.21% 0.38% 0.66% 1.32% 2.57% 0.00% 0.00% 0.00% 0.31%2001 0.15% 0.24% 0.37% 0.47% 0.50% 0.57% 0.80% 1.29% 0.00% 0.00% 0.40%2002 0.05% 0.18% 0.23% 0.53% 0.83% 1.15% 1.84% 1.00% 0.00% 0.45%2003 0.05% 0.19% 0.34% 0.65% 0.70% 0.72% 0.95% 1.20% 0.42%2004 0.06% 0.13% 0.24% 0.46% 0.79% 1.19% 1.33% 0.35%2005 0.01% 0.14% 0.27% 0.48% 0.99% 1.53% 0.32%2006 0.03% 0.31% 0.66% 0.62% 0.67% 0.36%2007 0.09% 0.24% 0.40% 0.35% 0.24%2008 0.01% 0.28% 0.17% 0.14%2009 0.01% 0.09% 0.04%2010 0.03% 0.03%

0.13% 0.15% 0.15% 0.18% 0.22% 0.27% 0.34% 0.43% 0.46% 0.43% 0.30% 0.32%

Year of Charge‐Off

Annual Loss Rate Concept

Life of LoanLoss RateConcept

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2%

Losses

1%

Time

Forecast Period Historical Losses

1 2 3 4 5 6 70

How Are You Going to Calculate Your CECL Allowance? What is Reasonable & Supportable?

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• FRB Philadelphia State Indices (Leading, Coincident)• FOMC Projections (Economic Projections of Federal Reserve Governors & Reserve Bank Presidents)

• Federal Reserve Economic Data (FRED) https://research.stlouisfed.org/fred2/ Examples of Data—Real Estate, Rental and Lease Earnings —Total Payroll Employment—Employee data by MSA —S&P Case‐Shiller Home Price Indices

“Reasonable & Supportable” Data Sources

• Role of executive management Cross‐cutting implementation Timing and decision making Internal control

• Role of the board and supervisory committee

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Governance

• Implementation plan Data (internal and external)

—Historical loss rates —Contractual lives —Segmentation

Models —Model risk management Reasonable & Supportable Forecasting New disclosures Internal Controls related to all of the above!

• Communication Not only the plan, but a broader understanding of credit risk is needed at origination/purchase

• Monitoring regulatory and professional developments57

Next Steps/Takeaways

NCUA Supervisory Priorities

• Cybersecurity Assessment • Cybersecurity remains a key supervisory focus. NCUA will continue to carefully evaluate credit unions’

cybersecurity risk management practices. • Bank Secrecy Act Compliance

• NCUA remains vigilant in ensuring the credit union system is not used to launder money or finance criminal or terrorist activity. All federally insured credit unions must perform certain recordkeeping and reporting requirements under the Bank Secrecy Act.

• Internal Controls and Fraud Prevention • Credit unions with limited staff may be more susceptible to insider fraud as a result of inherent challenges

maintaining adequate separation of duties. NCUA field staff will continue to evaluate the adequacy of credit union internal controls, as well as overall efforts to prevent and control fraud.

• Interest Rate and Liquidity Risk • On January 1, 2017, NCUA field staff will begin using a revised interest rate risk supervisory tool and new

examination procedures to assess interest rate risk management practices in credit unions. • Commercial Lending

• NCUA’s revised Part 723, Member Business Loans; Commercial Lending, is effective January 1, 2017. NCUA field staff will evaluate a credit union’s commercial loan policies and procedures and assess the risk management processes associated with managing a commercial loan portfolio. Credit union officials should be prepared to provide documentation to support management’s ability to effectively monitor and manage its commercial loan portfolio.

• Consumer Compliance• Given changes to the Military Lending Act that have gone into effect recently, as well as additional changes that

will go into effect in October 2017, NCUA field staff will evaluate credit unions’ compliance with the Act.

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NCUA Priorities

True/False Questions

• The new lease accounting standard will affect the Balance Sheet of my Credit Union.

• The Credit Union can make policy elections that will simplify the adoption of the new lease accounting standard.

• The FASB issued an accounting standard that eliminated currently required disclosures.

• CECL will be effective for Credit Unions for fiscal years beginning after December 15, 2020.

• Historical losses are not considered in ASU 2016‐13 (CECL).• The NCUA recently issued 6 supervisory priorities.

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Questions?

TRAVIS SMITH – 480.366.8341 [email protected]

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