JANUARY 25, 2017
The Many Sides of CECL
By Mark Loehrke, Editor, Financial Managers Society
Is it possible that CECL may turn out to be even bigger, costlier and more time-consuming than many institutions have anticipated?
Given the outpouring of hand-wringing and cursing that greeted the new accounting standard when it was first conceptualized several years back and has continued in earnest right up through its official unveiling last June, it hardly seems possible that implementation could be worse than what has long been anticipated. But according to KPMG, that may indeed be the reality staring down institutions that take too narrow a view of CECL.
Specifically, the firm argues in a recent piece posted to FEI, institutions that focus solely on developing allowance and impairment models to align with the new standard – admittedly, a major piece of the puzzle – may be headed for an unpleasant wake-up call when they discover just how much CECL stands to impact other areas of their operations. KPMG recommends that institutions get out ahead of this potential headache by expanding their CECL prep efforts to include areas such as:
◾ Project management and ongoing governance
◾ Data and technology
◾ Internal controls
This is easier said than done for most institutions, of course, but it’s worth considering as CECL creeps a little closer to reality with each passing month.
The good news in all of this? FMS has more resources available to help community institutions get out ahead of CECL than ever before, including a recent webinar from Mike Umscheid and upcoming on-site seminars with Mike in both Philadelphia and Atlanta.
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