CECL (Current Expected Credit Losses) | Wolters Kluwer
CECL
CECL (Current Expected Credit Losses)

CECL touches on the principal functions of finance, risk and regulatory reporting within an organization, so it is essential that the enterprise providing the systems can offer the technology, as well as the knowledge of its human experts, to support all three. Expertise in one or even two is not good enough.

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Managing data and expectations

When the Financial Accounting Standards Board (FASB) introduced a new impairment model, commonly known as CECL (Current Expected Credit Losses), applicable to the U.S. GAAP based countries such as the United States, Israel, Japan (limited), Switzerland (optional), it represented major shift from the existing incurred loss model.

Preparing for and implementing CECL will compel financial institutions to think about credit risk in new and more timely ways and to either recalibrate existing models or develop new ones, with matters being especially thorny and complex for institutions that operate across borders. Furthermore, CECL imposes a lot more requirements on financial institutions on the accounting and disclosure fronts.

 
 
 
 
 
 


Once the right systems are in place, the dovetailing of management and regulatory objectives permit firms to leverage the systems to accommodate the need for greater cooperation and communication among functions, particularly risk and finance, and at all levels of management in all places. That means a single system with the flexibility to behave like many smaller ones, allowing data to be shared and manipulated – for analysis, forecasting, budgeting and planning – in ways that conform to the needs of each part of an organization.



 
 
 

Insights

 
 
Will Newcomer explores why banks building in-house only solutions to CECL compliance may face significant challenges over the long haul.
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You no doubt are thinking about or are already preparing for CECL. To assist you through this vital process, we have released the CECL Buyer's Guide: Managing Data and Expectations.

This paper touches upon certain operational practices, especially cross-department cooperation, to help you implement the standard effectively while avoiding key pitfalls.

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This white paper examines how the various standards are being interpreted across a range of jurisdictions. We analyze some of the benefits and drawbacks of each standard, and the likely impacts for financial institutions. Finally, we explore some of the urgent actions that firms should take now - both to smooth their path to implementation, and to avoid creating more problems down the road.
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OneSumX CECL collates, standardizes and enriches data with the additional measures as per the CECL standards and automates the classi.cation through .exible business rules.

Having an end-to-end view of the CECL process ensures an integrated and completely auditable system greatly reduces the month-end costs and shifts attention from processing toanalyzing.

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