NCUA Issues Guidance on CECL Audit Minimum Procedures

The complexities of the Current Expected Credit Loss (CECL) standard remain a significant challenge for credit unions, particularly those juggling diverse portfolios. Navigating this new accounting landscape while ensuring compliance can be overwhelming. The NCUA’s recent Supervisory Committee Audit Minimum Procedures Guide Addendum, issued in January 2024, aims to provide much-needed clarity and specific procedures for credit unions of all sizes.

This whitepaper serves as a guide to the updated audit procedures, based on CECL. We delve into the key concerns regarding investments, providing detailed procedures for both available-for-sale and held-to-maturity debt securities. This whitepaper empowers you to navigate these new obligations with confidence.

One crucial aspect of the updated requirements is the mandatory periodic validation of all CECL models, regardless of whether they’re internally developed or sourced from third-party vendors. The NCUA emphasizes the importance of thorough and independent validations, underscoring the need for accuracy, reliability, and appropriateness in credit loss estimations. This whitepaper further clarifies the NCUA’s validation requirements for both third-party models and internally developed models. 

By understanding these requirements and embracing robust validation practices, you can ensure your credit union remains compliant and equipped to make informed financial decisions.

Read full whitepaper here!

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