Preliminary Models to Consider for CECL

As everyone in the financial institution industry is knee-deep in its analysis of the new Current Expected Credit Loss (“CECL”) model guidance issued by the Financial Accounting Standards Board (“FASB”) in June 2016, the questions on every financial institution’s finance team are: “What model should I use?” and “What data do I need?”  The FASB did not specify which model or methodology should be used and as a result, it is at the discretion of the financial institution to choose the correct model that fits that institution’s loan portfolio and risk profile, as well as the skills, experience and knowledge of the finance team and the cost/benefit of running the institution.

For more information, please see the attached AICPA Insights Article, “7 Models to Consider When Implementing the FASBs New Credit Losses Standard“. For additional information or assistance please contact James Dowling, MBA, Assurance Manager, and member of Marcum’s Financial Institutions Industry Group.