CECL Practical Transition Guide
The FASB’s Accounting Standards Update, Topic 326 (CECL) released in June 2016 presents institutions with new guidance for measurement of an Allowance for Credit Losses (ACL, or ALLL). Regardless of an institution’s required or targeted adoption timeline, and regardless of an institution’s complexity, both supervisory and accounting entitites have made clear that financial assets within the scope of ASU 2016-13 will need to be measured for lifetime credit loss expectations.
While initially daunting, we regard the transition exercise as, fundamentally, a project management problem; there exists a specific set of activities that, if performed correctly and thoughtfully, will reduce a compliant and defensible estimate of credit losses over the life of a financial asset or pool of financial assets. The documentation of that set of activities is the purpose of this Practical CECL™ Transition Guide: a series of 9 whitepapers to better assist with your transition.
Whitepapers in this guide:
- Guidance summary
- Peer and industry data
- Expedients versus cash flows
- Qualitative policy
- Loss driver analysis
- Discounted cash flow
- Selected benchmark credit loss reserves
- Data guide