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CECL: preparing for the new standard

Sponsored webinar: Wolters Kluwer

The Panel

  • Hal Schroeder, Board member, Financial Accounting Standards Board (FASB)
  • Mohit Dhillon, Senior director, Barclays corporate & international retail model development, Barclays
  • Marlene Lenarduzzi, Vice president and head, BMO model validation, BMO Financial Group
  • Will Newcomer, Vice president of product and strategy, US risk & compliance, Wolters Kluwer
  • Moderator: Blake Evans-Pritchard, Senior staff writer, Risk.net

The countdown to implementation of the current expected credit loss model (CECL) has begun. Banks and financial institutions around the world are grappling with how they will implement CECL when it is issued by the Financial Accounting Standards Board.

Under the new CECL model, banks should devise their own assumptions based on historical experience, current conditions and reasonable forecasts to estimate the expected loss over the life of a loan. This will require higher demand of sound data management systems to allow firms to accurately perform the necessary calculations and produce forward-looking assessments.

Organisations that have made significant headway towards CECL implementation discuss the current and perceived issues they face in achieving this transition. Specific issues covered include:

  • The current state of CECL guidelines and the industry’s reactions.
  • The challenges of transitioning from the incurred loss accounting model to the expected loss model in financial institutions under CECL.
  • How to achieve a successful enterprise-wide effort in implementation.
  • Understanding how collaboration between accounting and credit is critical in obtaining forward-looking information to protect the firm against expected losses.
  • A consistent accounting standard: the differences between IFRS 9 and CECL.

 

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