Since the FASB issued Accounting Standards Update 2016-13, institutions have learned that CECL refers to the current expected credit losses, that you will have to create a loss estimate when a loan is originated, and much more. Although there are significant new accounting issues to consider under CECL, institutions will also have to apply judgment and decide what loss identification practices work best for their loan portfolios. That’s because GAAP guides but doesn’t prescribe what you must do to be compliant. The regulators also have some guidance to consider.
How is your CECL transition planning progressing? Getting ready for the transition to the FASB’s revised approach to calculating your institution’s loan loss estimate involves having a step-by-step plan to meet the implementation deadline.
For example, to develop a CECL estimate of losses you will need to analyze a significant amount of loan level historical loss data against economic conditions that existed at the time the losses were incurred. Then you need to look forward and evaluate how forecasted economic conditions might affect your borrowers. That’s a lot of analytical work that will require planning between now and when the FASB’s CECL takes effect.
That’s why you need to have a plan in place now to make sure you will be prepared to meet the FASB’s guidance and any regulatory requirements. Your project must consider what data you need to capture going forward and how to use that data to prepare loss estimates. Since no institution has unlimited resources, the plan also must be reasonable based on your available staff and budget.
As implementation dates draw closer, now may be the time to assess your CECL transition planning progress. Do you have a committee working on the project? Who is ultimately responsible for ensuring that the new loss calculations will be ready? What systems changes must be made? Does the planning team understand what data should be captured? Does the team know what calculation methods will conform to GAAP? Has management provided adequate funding for the implementation process? What will a successful implementation look like? Have the FASB’s updated interpretations been considered in the planning process?
In this vital webinar, Gary Deutsch, CPA MBA, will take you through, step-by-step, the implementation issues you should be considering and how to assess your progress towards meeting those issues by your institution’s implementation date.
Some of the issues that will be covered in this webinar include:
- How to identify the loss data that you will need
- Methods for relating loss data to historical economic events
- Identifying sources for economic forecasts and how to properly use those forecasts in the estimation process
- How to modify your current loss estimation process to accommodate CECL guidance
- How to develop a plan to migrate from your current loss estimation process to a CECL compliant approach
- Identifying the FASB’s updated CECL interpretations that may impact your implementation process
- AND MUCH MORE!
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