FASB Votes to Delay CECL
July 2019

The Financial Accounting Standards Board (FASB) voted this week to delay CECL’s effective date for most financial institutions until January 2023. The proposed changes are subject to a 30-day comment period after which the FASB will finalize its proposal. Assuming the proposal is finalized, this decision will enable institutions to further prepare for one of the most impactful financial accounting changes in decades. Visible Equity will continue assisting banks and credit unions with their implementation efforts and we are excited that the FASB has given our clients more time to better prepare for this significant accounting change.

Now that we have the FASB to thank for giving everyone another year to prepare for CECL, here are some important things every institution can do to take advantage of this opportunity. 

Get your data ready. Data readiness is one of the most challenging aspects of preparing for CECL. Each CECL methodology is dependent on different data variables and historical data requirements, and there is a strong correlation between data quality and flexibility in using various CECL methods. The better the quality of data and the more historical data you have the more flexibility you will have in testing all of the CECL methodologies. You now have one more year to gather historical information and get your data ready and your CECL flexibility has just improved because of FASB’s decision to delay.

Run parallel calculations. In order to determine CECL’s potential impact to your institution’s capital requirements, you need to begin assessing methodologies and determine the effect they will have on your allowance. For this reason it is critical to begin assessing various CECL methodologies and run parallel calculations with your current allowance. You now have one more year to run parallel calculations, assess CECL’s impact to your allowance, and more adequately prepare for potential changes to your institution’s capital requirements.

Prepare for audits and examinations. This year was an eye-opener for many of our clients with respect to what they will need to provide examiners and external auditors as required by CECL. An institution will be required to provide a number of disclosure reports to justify the methodologies they selected and adequately support other provisions and assumptions they used in the calculation of their allowance. The sooner you have fully implemented CECL, the more prepared you will be for audits and examinations. You now have another year to get ready.

Visible Equity is here to assist you with all of your CECL preparation needs. The FASB’s decision to delay CECL is a wonderful opportunity for financial institutions to better prepare for this significant accounting change. We are moving full speed ahead to help ensure that all of our clients will be ready to go well in advance of the new January 2023 effective date.



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