Risk Environment Part 2: Leveraging your CELC journey for continued success

“CECL becomes effective for federally insured credit unions for financial reporting years beginning after December 15, 2022. Required regulatory reporting will begin with the March 31, 2023 Call Report. Institutions may adopt the standard sooner.” As stated by the NCUA in a recent update on CECL Resources.

This new accounting methodology replaces the previous Allowance for Loan and Lease Losses (ALLL) accounting standard, and focuses on estimation of expected losses over the life of the loans, whereas the previous relied on incurred losses. The effective date is inclusive of all financial institutions except for credit unions with total assets less than $10 million (12 U.S.C. §1782(a)(6)(C)(iii)). That is, unless explicitly required by State Supervisory Authorities under state law for federally insured, state-chartered credit unions.

CECL requires measuring all expected credit losses for financial assets held as of the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. All of this is dependent upon the integrity and accuracy of available data.

Here are six key considerations when evaluating data quality:


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