LEARNING LESSONS FROM CECL IMPLEMENTATIONS
CECL is now a reality for all banks and credit unions in the United States. Whether those institutions are designing, building, or testing ECL systems or deciding between competing third-party providers, the January 1 deadline looms large.
Most accounting standards apply equally to banks and credit unions, both in terms of process and economic impact. CECL differs from this paradigm by allowing choices in ECL methodology that require varying levels of complexity in terms of setup and very different outcomes in terms of ﬁnal loss provision. The net effect is that ﬁnancial institutions need to decide on the sweat investment now versus the competitive advantage later.
This series of articles and opinions are designed to demystify some of these complexities, covering best practices in methodology selection, pooling, and application of Q-factors. The design and build of the systems themselves are covered, allowing FIs to think about how to approach CECL as a project rather than an accounting standard.
We hope these are useful to you wherever you are on the road to CECL, and we encourage you to visit CECLExpress.com for further insights and resources curated with the express intention of helping ﬁrms enjoy an easy transition.