Credit union executives are gearing up for what very well may be the biggest accounting change experienced in their lifetimes: CECL, the Financial Accounting Standards Board’s new current and expected credit loss model. As early as 2020, the accounting process that’s been in place for the past 40 years will no longer be accepted; there will be a new standard for recognizing and calculating credit losses.

Jack Henry & Associates’ Strategic Initiatives Group conducted a survey earlier this year of more than 400 financial institutions that measured market understanding, readiness, perceived challenges and impact surrounding CECL. The results indicate that financial institutions aren’t quite as organized or prepared as they should be at this point.

Three years may seem like a long time, but it actually is not when considering the data collection, archiving and coordination that must happen to be ready for CECL. As the compliance deadline nears, credit unions should keep the following steps in mind to better prepare for a successful and timely CECL implementation.

 

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