7 To-Dos for Success with Auditors and Regulators
How are auditors and regulators viewing the transition to CECL? How can banks and credit unions plan accordingly?
At the MST 2016 National ALLL Conference, Molly Curl and John Reedy of Grant Thornton, LLP gave banks and credit unions practical ideas for preparing for CECL implementation, ideas rooted in the understanding that estimating the allowance will change things enterprise-wide for financial institutions:
1) Integrate credit risk and allowance functions. Marry the information together to make them work with each other.
2) Evaluate expected credit loss scenarios to find what’s working well.
3) Implement model validation and MRM.
4) Compile data.
5) Don’t spare costs – take steps needed now for appropriate measurement in the future.
6) Documentation critical for auditors and regulators: loan groupings, forecasts, assumptions, controls, processes, etc.
7) Sound credit risk practices = strong CECL model development and implementation.
Check out the MST Talk with John Reedy on Understanding the Regulatory Implications of CECL. Watch for the full National ALLL Conference Digest coming soon.
Wondering what steps you should take to move toward CECL implementation in your bank or credit union? Download our Seven Steps to a CECL-Compliant Model whitepaper.