When it comes to the current expected credit loss (CECL) standard, the question moving forward is no longer, "What are you going to do about CECL?" but rather, "Are you ready for CECL?”

The new standard, which was approved by the Financial Accounting Standards Board (FASB) in June 2016, is expected to impact change in the way companies account for impairment of financial assets, as they are now required to estimate expected credit losses over the contractual life of a financial asset at the time of recognition. As such, companies may need to gather additional and diverse data about their financial assets in order to comply with the new standard.

Below is a listing of financial asset examples within scope of CECL as well as those exempt from the standard (not all inclusive):

Financial Assets within CECL scope
  • Loans
  • Trade receivables
  • Contract receivables
  • Reinsurance recoverables
  • Financial guarantees
  • Purchased financial assets with credit deterioration (PCD)
Financial Assets exempt from CECL scope
  • Policy loan receivables (insurance companies)
  • Pledge receivables (non-profit entities)
  • Receivables/loans between common control companies
  • Notes receivables from participants in defined contribution EBPs


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When Is CECL Effective – At A Glance

  • Public Business Entities that are SEC Filers (excluding Smaller Reporting Companies as defined by the SEC based on a one-time determination of eligibility using the most recent determination as of November 15, 2019) - fiscal years beginning on or after December 19, 2019.
  • All other entities - fiscal years beginning on or after December 15, 2022, including any interim periods within those fiscal years.

While there was a deferral in the original effective date for some entities, they should not slow down their implementation efforts. This additional time should be utilized to enhance your efforts to implement a robust approach in adopting this accounting standard – one that meets all your compliance and system needs.

PBEs - SEC Filers Excluding Smaller Reporting Companies (SRCs)
Already effective
PBEs - SRCs and All Other PBEs
January 2023*
All Other Entities
January 2023*

*Assuming a calendar year end.

How Can DHG Help?

DHG brings a collaborative team to consult with you every step of the way, working with your stakeholders to create a CECL methodology that is understandable, operational and tailored to affected entities.

Our professionals are poised and ready to assist with your questions and needs regarding CECL implementation in today’s challenging environment. We can assist your management team with the following adoption and implementation objectives:

  • Board and Stakeholder Training
  • Project Planning
  • Vendor Selection
  • Process and Control Documentation
  • Model Validation