Loan Zone: CECL compliance considerations
What credit unions need to know about accounting for the new credit loss standard.
The current expected credit loss standard—or CECL as it is more commonly called—will fundamentally change how U.S.-based financial institutions account for credit losses.
Before CECL, FIs used relatively simple analytical models to account for losses based on actual defaults or on specific events that indicated a loss. Set to take effect for credit unions Dec. 15, 2021, CECL will require CUs to calculate expected loss over the whole lifetime of a loan.
Below is a primer on this new accounting standard, including what you and your staff should be considering now to prepare for the changes ahead.
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