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


Top 5 Considerations for Future CECL Adopters
Model Behavior: The Benefits of Credit Stress Analysis
CECL and COVID-19: Q1 Reflections and Insights

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.

PBEs - SEC Filers Excluding Smaller Reporting Companies (SRCs)
January 2020
PBEs - SRCs and All Other PBEs

January 2023
All Other Entities

January 2023

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