CECL Accounting Standard Implementation

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

When is CECL Effective – At A Glance

(*Prior to the potential adoption of July 2019 guidance.)

Public business entities that are SEC Filers - fiscal years beginning on or after December 19, 2019.
All other public business entities - fiscal years beginning on or after December 15, 2020.
Non-public business - fiscal years beginning on or after December 15, 2021, including any interim periods within those fiscal years.

In July 2019, FASB proposed a delay in the implementation dates for the new CECL standard for many companies. The proposal did not change the implementation for SEC registrants; however, all other companies and SEC registrants that meet the SEC’s definition of a smaller reporting company (SRC) would see a delay in implementation to begin in fiscal years beginning on January 1, 2023.

CECL-Filing

Despite the proposed effective date changes, entities should not slow down their implementation efforts. If approved, the 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.

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

Reach out to our team for questions or more information regarding CECL implementation efforts.

Learn More

CECL Implementation for Financial Institutions

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Implementing Current Expected Credit Loss (CECL)

Are You Ready for CECL?

Accounting Standards Updates

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CECL and COVID-19: Q1 Reflections and Insights

As the dust has settled and most large U.S. Securities and Exchange Commission (SEC) financial institutions have reported Q1 results via their Form 10-Q reports, the first disclosures and financial information regarding implementation of the current expected credit losses (CECL) accounting standard are now available for investor/public consumption.

COVID-19 and Allowance for Loan Loss Considerations

As financial services companies have been devoting a considerable amount of time and energy on pandemic planning and response, in addition to quickly responding to the short-term lending needs of their borrowers, they find themselves now turning their attention to quarterly financial reporting and, more specifically, how best to estimate and support an allowance for loan losses (ALL) in the current COVID-19 environment.

CARES Act – CECL Implementation not Delayed for Insurers

Publication | Apr 03, 2020
More About | Insurance | CECL | COVID-19

On Wednesday, March 27, 2020, the U.S. Senate voted unanimously to advance “Phase Three” of a congressional response to the COVID-19 emergency.

Where Is Your Financial Institution in the CECL Adoption Process - Top Five Takeaways from DHG’s CECL Roundtable.

On Sept. 5, 2019, DHG hosted a roundtable in Harrisburg, Pa., inviting representatives from several banks actively involved in the current expected credit loss (CECL) implementation process to discuss trending topics for the CECL standard.

FASB Finalizes Effective Date Delays for Major Accounting Standards

Today, the Financial Accounting Standards Board (FASB) issued two Accounting Standards Updates (ASUs) that finalize various effective date delays for standards on current expected credit losses (CECL), leases, hedging, and long-duration insurance contracts.