Nearly a Third of Financial Institutions Still Undecided on CECL Implementation Methodology

CHICAGO (August 2, 2018) – A flash poll conducted by Baker Tilly Virchow Krause, LLP (Baker Tilly) indicates nearly 30 percent of depository and lending institutions are undecided about which methodology to use for implementation of the Financial Accounting Standards Board’s (FASB) Accounting Standard Update (ASU) 2016-13 Financial Instruments (Topic 326) – Measurement of Credit Losses on Financial Instruments. ASU 2016-13 is commonly referred to as the current expected credit loss (CECL) standard.

“Although the CECL effective date is over a year away, 2018 is when regulators will begin asking questions about the current state of financial institutions’ CECL implementation processes,” Ivan Cilik, CPA, partner in Baker Tilly’s financial services practice group, said.

“There are a variety of CECL models that institutions can use to achieve compliance, which is why regulators know that not every institution will be perfect come implementation date,” Matt Nitka, CPA, senior manager in Baker Tilly’s financial services practice group, said. “The key with implementation is to ensure your institution’s approach is reasonable and supportable, and that the methodology selection is completed in a good faith effort.”

Baker Tilly recently held an educational webinar CECL implementation: loan segmentation, to assist depository and lending industry professionals that are working to implement FASB’s CECL standard learn about loan portfolio segmentation.

The webinar presenters discussed:

  • Common loan portfolio segmentation issues under CECL.
  • Best practices in the loan segmentation process, including detailed analysis of the risk associated with each loan segment.
  • How to best leverage existing loan portfolio data in order to drill down into portfolio attributes and determine appropriate pool populations and limitations relative to the identified risks.

Presentation slides and a recording of the webinar are available at bakertilly.com/insights/cecl-implementation-loan-segmentation.

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Baker Tilly Virchow Krause, LLP (Baker Tilly) is a nationally recognized, full-service accounting and advisory firm whose specialized professionals connect with clients and their businesses through refreshing candor and clear industry insight. With approximately 2,800 employees across the United States, Baker Tilly is ranked as one of the 15 largest accounting and advisory firms in the country. Headquartered in Chicago, Baker Tilly is an independent member of Baker Tilly International, a worldwide network of independent accounting and business advisory firms in 147 territories, with 33,600 professionals. The combined worldwide revenue of independent member firms is $3.4 billion.