Top Five Resources for CECL and Navigating the Transition
CECL implementation timelines have been altered since the release of this post. Find updated information here.
The Current Expected Credit Loss (CECL) model, otherwise known as the “biggest change to bank accounting yet”, goes into effect in 2020 for banks that file with the Securities and Exchange Commission (SEC) filers and in 2021 for all other financial institutions. The change impacts all financial institutions, including community banks, credit unions and larger banks. Even though the standard has been announced for almost two years now, some financial institutions’ biggest challenge is still how to start preparing. In a recent poll of 403 representatives from financial institutions on ALLL.com, 29.5 percent have done little so far to prepare for the complex accounting change, which will impact credit, finance, and management teams at those institutions.
With numerous blog posts, papers, and webinars surfacing, the amount of content to process can be overwhelming. To simplify the searching process, the following is a list of five comprehensive CECL resources available to help financial institutions navigate the CECL transition, no matter what implementation stage they are in:
CECL Methodology Webinar Series
This 8-part webinar series hosted by Abrigo provides an overview of available CECL methodologies, and subsequent pool-specific sessions demonstrating live calculations between Excel and Sageworks ALLL from Abrigo. It focuses on commercial real estate (CRE) methodologies, commercial and industrial (C&I) methodologies, and an overview of available methods for calculating ALLL.
Accounting Standards Update – Topic 326
The primary source for FASB’s accounting change can be found here. The standard walks through who will be affected by the update, the main provisions in the new standard, and differences between current generally accepted accounting principles (GAAP) and future GAAP. It also explains the required timeline and specific amendments to the standard.
Learn more about navigating the CECL transition.
CECL Prep Kit
The CECL prep kit is an Abrigo-compiled toolkit that aggregates industry resources to help institutions better prepare for the CECL accounting change. It includes key links for industry information on the new standard, on-demand webinars, and prep guides that include summaries of data, methodology selection, and implementation planning.
American Bankers Association CECL Resources
The American Bankers Association (ABA) provides comprehensive resources to members for CECL preparation. For example, they have discussion papers available to coordinate community bank efforts to implement the standard. Their discussion papers walk through implementation timelines, loss rate calculations, risk characteristics, etc.
ALLL.com is a site dedicated to financial institutions who are preparing for their allowance. On the site, there is a section called “CECL model”, which provides robust reporting and best practices content centered on the new accounting standard. Subscribers to the site can access complimentary papers, webinars and news articles to keep them informed on CECL.