CECL: The hour is getting late

In June 2016, “Finding Nemo” was dominating the box office, Drake was topping the charts, LeBron James was leading the Cleveland Cavaliers to an NBA championship and we were 98 years removed from the last major global pandemic. 

Also in June 2016, the Financial Accounting Standards Board issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. Over time, ASU 2016-13 became better known as CECL.  After over six years and multiple delays, CECL is finally set to become effective after December 15, 2022. 

Understandably, given the chaos of the past two years, a number of financial institutions are not yet ready to adopt CECL. In fact, there remain a number of institutions that are still in the early stages of developing their CECL calculation methodology. Although many bankers continue to hold out hope, it is highly unlikely that any additional delays are forthcoming. 

That means, if you haven’t already, now is the time to get serious about developing a CECL solution. Financial institutions who have already implemented CECL have discovered that their initial calculations often contained errors or design flaws, and that it was necessary to make significant revisions from the original. Having a CECL solution in place in advance of the deadline is important as it will allow time to make any necessary corrections before they have an impact on financial reporting. 

How Wipfli can help

If you’re struggling to develop your calculation, or if you have a preliminary calculation that needs an outside review, we would love to help! We have resources available on our CECL webpage: CECL: Current Expected Credit Loss | Wipfli or you can sign-up for our free CECL readiness snapshot: CECL Readiness Snapshot - Wipfli.