On Compliance: Don’t slow down on CECL despite delay

Use the extra time to ensure a successful implementation by 2023.

This July, the Financial Accounting Standards Board unanimously voted to propose a delay for the implementation of the current expected credit loss standard for some institutions. This marks the second delay for credit unions, pushing the effective date to January 2023. (Stakeholders may comment on the proposal until Sept. 16.) While this delay may come as a relief for some financial institutions, it’s also important to remember that institutions will be held accountable for the additional time given.

The new CECL standard has been called the “most sweeping change” to bank accounting and, due to its complexity, it can pose significant challenges to financial institutions of all sizes, especially when it comes to data. Rather than wait until 2023, non-public business entities have a unique opportunity to get ahead of the game.

“Financial institutions should be cautious about taking the foot off of the gas pedal, especially if they have already formed a CECL steering committee or started down the path of any type of data gap assessment or building a model or engaging with a third-party solution,” says Regan Camp, Abrigo managing director of advisory services. “Some people are going to embrace any delay as ‘I’m going to hurry up and wait, and we’ll get started a couple of years down the road.’ Then, in three years, they’ll be on the sidelines with their fingers crossed hoping to get additional relief.”


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