A Checklist To Assist You In Implementing CECL
According to the new standards enforced by the Financial Accounting Guidelines Board (FASB), creditors have to mandatorily use the Calculated Expected Credit Loss (CECL) method starting next year. When there is a change like this, it is an opportunity for credit professionals to take the lead.
Credit Managers must understand CECL and it’s requirements before execution. Here's a simple checklist to assist you in implementing CECL in your organization.
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How to document policies, processes, and procedures in a well-documented central, searchable repository. |
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Review policies periodically on a set schedule. |
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Set a pre-defined escalation policy to ensure regular reviews are conducted on a set schedule |
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Provide transparency into estimates to allow for benchmark comparisons over time. |
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Present information in a clear and concise format. |
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Standardize reports, including charts and tables, to facilitate period-top period comparison. |
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For clarity purposes, provide definitions of terms and the process steps. |
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How to begin early in the implementation process to communicate with the board and senior management with total transparency |
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Interpretation of the standards |
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Implementation challenges and key decision points, limitations, and unknowns. |
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Potential impacts of new standards on profitability, working capital, and overall strategy. |
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Recorded minutes of meetings, to support the rationale for implementation decisions. |
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Feedback from regulators and auditors |
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Implementation progress and next steps. |
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