Many banks and credit unions will have additional time to prepare for the new Current Expected Credit Loss accounting system after the Financial Accounting Standards Board recently voted to delay implementation for a select group.

Public banks that are SEC filers excluding small reporting companies will still have to implement CECL at the beginning of next year, according to FASB’s recent meeting minutes, but for all other entities, the board decided that CECL will be effective for fiscal years beginning after Dec. 15, 2022.

FASB’s board concluded in the minutes that it has received sufficient information and analysis to make an informed decision on the perceived costs of the changes brought on by CECL, and that the expected benefits would justify the expected costs of the amendments in the proposed update.

While the industry trade groups were pleased with the decision, they maintained that more information was needed to assess the impact of CECL, and urged Congress to act on previously proposed bills that would delay the rule for all financial institutions until a thorough impact study had been conducted by the major regulators.

“While the proposed one-year delay will help small credit unions come into compliance with this rule, the fact remains that CECL is a solution in search of a problem,” CUNA Deputy Chief Advocacy Officer Elizabeth Eurgubian said in a statement. “We maintain that CECL will only hinder credit unions’ ability to uplift low-income borrowers and maintain that a quantitative impact study is critical to understand the far-reaching effects of CECL, including its impact on credit availability.”

Pending bills in the House and Senate introduced by Reps. Vicente Gonzalez (D-Texas) and Ted Budd (R-North Carolina) and Sen. Thom Tillis (R-North Carolina) have proposed delaying CECL for up to a year after being enacted until the major regulatory agencies – the Federal Reserve, the OCC, FDIC, NCUA and SEC – can thoroughly assess CECL’s impact.

Rob Nichols, president and CEO of the American Bankers Association, called FASB’s vote to delay CECL for certain smaller banks proof that the required efforts to implement CECL are far greater than FASB’s board has previously led bankers to believe.

“A partial delay without a requirement for study or reconsideration simply kicks the can down the road – it does not reduce the ongoing data, modeling and auditing requirements facing smaller banks or address the increased procyclicality it will cause,” Nichols said in a statement. “The delay should apply to banks of all sizes, and should be used to conduct a rigorous quantitative impact study to properly assess the effect this new standard will have on their ability to serve their customers and the broader economy, particularly during an economic downturn. We encourage Congress to act quickly to ensure this flawed standard is delayed for all institutions until such a comprehensive analysis can be completed.”