Recently, the Federal regulatory agencies issued updated Frequently Asked Questions on the new accounting standard for credit losses, Current Expected Credit Losses (CECL). The new standard will take effect in 2020, 2021 or 2022 depending on the institution’s characteristics. The Frequently Asked Questions is intended to help institutions understand the regulators expectations under the new standard.
The Federal regulators continue to emphasize that:
- Community institutions are not expected to need to adopt complex modeling techniques to implement the new accounting standard.
- No one system is preferred over others. The agencies expect an array of credit loss estimation methods will be used under CECL.
- The agencies expect institutions to make good faith efforts to apply the new credit losses standard in a sound and reasonable manner.
- Institutions should continue preparing to implement the standard.
For the complete FAQ, please click here. If you have questions regarding implementation of CECL, where to start or just need a sounding board, ABS is here to help guide you through the transition.