CECL Modeling and Accounting

Compliance with the current expected credit loss (CECL) standard starts with organizing your data and selecting the right models.

The math for CECL is straight-forward. But organizing the data can be complex. CliftonLarsonAllen (CLA) can predict potential challenges with each model, and help create opportunities for your organization as you learn what’s needed for the accounting process.

What’s on your mind?

  • Selecting the model(s) that best fits your organization
  • Identifying relevant, reliable, and sufficient data for modeling
  • Determining software needs for organizing and storing your calculation data
  • Segmenting your portfolios based on risk
  • Simplifying the standard’s specific guidance for easier implementation
  • Identifying how the standard will impact the recording and disclosure of credit losses in your financial statements

A unique approach

Determining what historical information, current conditions, and reasonable and supportable forecasts should be included in your expected loss models doesn’t come easy. You don’t have to figure it out alone. Whether you’re ultimately looking to manage data on your own, or are looking for more involved assistance for financial assets and loan portfolios, we can help organizations of all sizes calculate lifetime expected losses.

How we can help

Using first-hand experiences, we’ll work through the phases of implementation together:

Planning, orientation, and training phase

Get to know your financial assets and CECL models, then review a summary of the convergence guidance. We’ll help you build a high-level project plan and establish a committee to provide project oversight — and our customized training program highlights your business practices that may change due to the new standard.

Historical loss rate methodology phase

Evaluate the pros and cons of each methodology for computing historical lifetime loss rates and their applicability to your receivable portfolio.

Data collection and historic lifetime loss computation phase

Identify required data elements based on selected methodologies. This includes organizing your data into a useable format and developing the computation for historic lifetime loss rates.

Additional phases

Once you’ve completed these phases, we can also help you implement qualitative and forecast adjustments into your calculation, update policies and procedures, and organize your data to comply with the new financial statement disclosure requirements.

Effective dates

SEC filers — Annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years.
Other public business entities — Annual reporting periods beginning after December 15, 2020, including interim periods within those fiscal years.
Non-public business entities — Year-end of annual reporting periods beginning after December 15, 2020.

Early adoption is permitted for fiscal years beginning after December 15, 2018.