1. Allowance for Credit Losses Estimate Under CECL: Step-by-Step Development

Allowance for Credit Losses Estimate Under CECL: Step-by-Step Development

Event ID: 2142052
Date: Recorded on 12/4/2019
Duration: Scheduled for 90 minutes including question and answer period.
Presenter: Gary Deutsch, CPA, president, BRT Publications, LLC
Credits: Live webinar approved for 1.5 NASBA credit hours (Management Services)

Allowance for Credit Losses Estimate Under CECL: Step-by-Step DevelopmentActions

Let's face it, with CECL implementation dates approaching, there are still many unanswered questions. That's why the regulators published a revised FAQ document. However, even with the regulator's guidance, the process for developing an allowance for credit losses estimate is still not well defined. In fact, the regulators state that the process is up to each institution if it documents how it arrived at its estimate so examiners can review the adequacy of the estimation process. So, examiner scrutiny will continue under CECL just like under the incurred loss method.

The main difference that examiners will look for is documentation of the impact of including reasonable and supportable forecasts. The inclusion of forecasts in the estimation process has led some institutions to consider how they can reuse stress testing data as substitutes for economic forecasts. Others have questioned whether forecasts will replace the need for qualitative adjustment factors.

Questions about forecasts and other estimation issues could make preparing for future examinations more difficult unless there is some practical guidance on the steps to follow when preparing an allowance for credit losses (ACL) estimate. That's why this webinar is focused on providing attendees with an example of the step-by-step process that institutions can follow when preparing their ACL under CECL. This approach, if properly documented, could serve as a template for institutions to follow when testing to see if they are ready for implementing CECL. Please join our expert, Gary Deutsch, CPA MBA, as he discusses the step-by-step process for preparing an ACL under CECL.


  • How to identify the processes that you can reuse from your ALLL estimation methods
  • An overview of the ACL estimation process under CECL
  • How to incorporate reasonable and supportable forecasts in your estimates
  • How to include qualitative factor adjustments in the ACL
  • Identifying the data needed to support the components of the estimation process
  • Alternative estimation methods that are consistent with regulatory expectations
  • How to ensure GAAP compliance
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