A statement from four federal financial regulatory agencies will promote consistency in the interpretation and application of the Financial Accounting Standards Board’s credit losses accounting standard, which introduces the current expected credit losses methodology, according to a May 8 statement from the Board of Governors of the Federal Reserve System.

The interagency policy statement from NCUA, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency describes the measurement of expected credit losses using the CECL methodology and updates concepts and practices detailed in existing supervisory guidance that remain applicable.

The statement will be effective at the time of each agency’s adoption of the credit losses accounting standard.

The agencies also finalized interagency guidance on credit risk review systems. The guidance presents principles for establishing a system of independent, ongoing credit risk review in accordance with safety and soundness standards.

The full statement can be accessed on the Federal Reserve website. The Federal Register notice can be accessed by clicking here.