The primary objective of FASB's CECL standard is to provide investors with more meaningful and timely information regarding credit risk, but it also presents a unique opportunity for financial institutions to advance credit risk practices, break down silos and strengthen business decisions. What steps can your organization take to extract value from CECL, beyond compliance?
Global Association of Risk Professionals | March 2018
Moody's Analytics Introduces the ImpairmentStudio Platform to Help US Firms Meet New CECL Accounting Standard
Moody's Analytics recently launched the ImpairmentStudio™ platform to help US firms calculate and report on the allowance for credit losses under the new Current Expected Credit Loss (CECL) accounting standard.
FASB's new accounting standard will have a significant effect on financial statements. Financial institutions must educate their investors and shareholders about how CECL-driven disclosure and reporting changes could potentially alter the bottom line.
Global Association of Risk Professionals | October 2017
With the Current Expected Credit Loss standard for loan loss accounting set to go into effect starting in 2020 for SEC registrants (and in 2021 for all other banks), financial institutions still have time to consider where CECL’s ripples will appear across their operational areas. Better integration between functions such as accounting, risk management and data analysis is just one of several priorities emerging as CECL’s effective date draws closer. For institutions looking to get ahead of the curve, data management may rise to the top as a near-horizon priority.
ABA Banking Journal | August 2017
A new model for expected credit losses is supposed to fix flaws in the accounting system and protect against future financial crises. But the so-called CECL model comes with its own set of challenges that will dramatically change firms’ accounting practices for impaired loans. In this article, Masha Muzyka from Moody's Analytics explore the potential complexities with CECL and discusses how this new model changes accounting for loans with evidence of deterioration of credit quality since origination.
Global Association of Risk Professionals | May 2017
According to an impact study by the European Banking Authority, IFRS 9 will force banks to increase loan loss provisions by as much as 30% and could cut Common Equity Tier 1 (CET1) ratios by up to 75 basis points. The equivalent US accounting standard – the Current Expected Credit Loss (Cecl) rule – could pack an even bigger punch.
Risk.net | March 2017
The Financial Accounting Standards Board’s newly finalized Current Expected Credit Loss Accounting standard, also known as CECL, represents the biggest change to bank accounting ever. If you’re a CEO and you just tell your CFO to take care of this, you will spend a lot of money on this—and fail. Your capital will swing back and forth, and each quarter’s results will be a big guessing game. This will negatively affect your ability to serve your customers and communities. Don’t just think of CECL as an accounting change—but rather a change to how all banks manage their business.
ABA Banking Journal | August 2016
FASB's Current Expected Credit Loss Model for Credit Loss Accounting (CECL): Background and FAQ's for Bankers
This document covers the key issues bankers and others are asking related to FASB’s issuance of its CECL credit loss accounting standard.
American Bankers Association | June 2016
FASB and the International Accounting Standards Board have been working to develop a converged standard for financial instruments since the 2008 financial crisis, although they ended up with different approaches to accounting for credit losses and loan impairments (see FASB Releases New Financial Instruments Standard on Accounting for Credit Losses). FASB’s new standard uses a current expected credit loss, or CECL, model, as opposed to the old incurred loss model, while the IASB is using an expected credit loss model.
Accounting Today | June 2016
The FASB's CECL model represents a transformation in bank accounting. But what, exactly, does this new model entail? In this article, Christian Henkel from Moody's Analytics provides an overview of the new standard and what the implications will be to institutions.
Global Association of Risk Professionals | April 2016