UNDERSTANDING LOAN CLASSIFICATIONS UNDER CECL
CECL IS APPROACHING In June 2016, the Financial Accounting Standards Board (FASB) provided us with a new expected credit loss accounting standard. The current expected credit losses methodology (CECL) was introduced by this new accounting standard to estimate allowances for credit losses. The effective date of CECL was pushed back by the FASB to January 2023 from January 2021 for smaller reporting companies. For non-public companies, it has been moved from January 2022 to January 2023. The definition of smaller reporting companies is as per the rules laid out by […]
AN OVERVIEW OF THE 5 MAIN MODELS THAT ARE RECOMMENDED FOR CECL
THE CECL METHODOLOGIES The Current Expected Credit Losses (CECL) methodology for estimating allowances for credit losses came into existence on June 16, 2016, and was issued by the Financial Accounting Standards Board (FASB). CECL replaced the Allowance for Loan and Lease Losses (ALLL) accounting standard. ALLL relied on losses that were incurred but did not […]
