Although the newly approved CECL standard will not be effective for a few years, institutions should construct an implementation plan now to prepare for the changes.


Financial Institutions Face New Credit Loss Standard

  • Thomas Danielson
  • Todd Sprang
  • 6/17/2016

On June 16, 2016, the Financial Accounting Standards Board approved the long-awaited Current Expected Credit Losses (CECL) standard. Officially, the standard is ASC Topic 326 Financial Instruments-Credit Losses, but it is commonly referred to as CECL.

Get more information to help your institution implement the new rules. Learn more

CECL represents a major change in the way financial institutions recognize credit losses. The largest impact will be on a financial institution’s Allowance for Loan and Lease Losses (ALLL) calculation, but it also applies to credit losses on held-to-maturity debt securities and loan commitments.

The new standard has the following effective dates

Entities Document(s) Effective date
SEC filers 10-Q and Call Report March 2020
Non-SEC public business entities Call Report March 2021
All other entities Financial statements and Call Report December 2021

Although most entities have more than four years before this new standard is effective, CECL requires an extensive analysis of your loan loss history, making a long implementation period necessary. Institutions should start reviewing the new standard now and plan for this major change.

How we can help

CLA has developed a multi-phase implementation plan for financial companies and institutions. We anticipate providing continuous insights on the CECL standard as it progresses.