CECL Services
Succeed in the New Era of Credit Loss Accounting
Businesses, irrespective of size or ownership (public or private), have likely already transitioned to, or are in the process of transitioning to, the Current Expected Credit Loss (CECL) model.
At CFGI, we offer ongoing comprehensive oversight of the new credit loss accounting model’s impact on information technology, risk management, technical accounting, operations, and financial reporting. Our unique blend of financial and technological expertise equips us to address the core elements of CECL:
Information technology
Data standards, data quality, data operations, infrastructure management, user access, and other IT-related factors.
Risk
Vendor selections, model selections, model estimates, model implementations, sensitivity analysis, loss forecasting, and other evaluations.
Accounting and finance
Financial reporting processes adjusted to account for changes to accounting, data requirements, disclosures, and controls associated with CECL modeling.
CFGI’s cross-functional expertise facilitates collaboration among the right stakeholders, optimizing the interrelated, co-dependent workflows tied to CECL modeling.
CFGI’s Five-Phase Roadmap
Whether adopting CECL for the first time, or overhauling your CECL methodology, estimating expected credit losses is a complex task and there is no one-size-fits-all approach. CFGI has developed a flexible five-phase roadmap, instructive yet adaptable to each organization’s nuances. Our in-house CECL experts provide guidance at each phase:
Understand CECL and Data Collection
Help organizations grasp the new standard, understand scope, assess people, processes, and technologies involved in CECL modeling, and establish a cross-functional team for documentation and organization.
Risk Identification and Technology Implications
Assist in selecting credit loss model vendors, and identifying credit-risk characteristics influencing model selection, including consideration of CECL requirements around historical data, current conditions, and reasonable and supportable forecasts.
Management Oversight
Aid organizations in documenting technical accounting conclusions, policies, controls, and information relevant to auditors, regulators, analysts, and investors.
Financial Reporting
Assist in creating repeatable processes for reconciling allowances with data, disclosures, and analytics, ensuring effective internal controls.
Investment Accounting
Help businesses apply the CECL model to financial assets beyond loans and leases, including held-to-maturity securities, and apply the separate credit loss model specific to available-for-sale securities.
Ongoing Credit Loss Accounting Support
Accounting for expected credit losses beyond CECL adoption is an ongoing, complex task. Credit loss methodologies and models require updates as organizations’ historical experience and the economic environment changes, and as organizations’ credit loss estimate needs change. Financial reporting and internal control environments require a certain cadence for performing CECL calculations, executing reconciliations, and documenting thoughtful analysis underlying credit loss model assumptions.
At CFGI, we assist organizations with ongoing CECL support, including all elements of model executive, model assumptions analysis, internal control requirements including technical documentation, and financial reporting.
Connect With Our Leaders
Diana Cordeiro
Partner
(617) 308-2754
dcordeiro@cfgi.com
Jillian Morrow
Partner
(732) 513-0179
jmorrow@cfgi.com
Cody Simants
Partner
(586) 295-3714
csimants@cfgi.com
