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Get ready for CECL with this five-part live webinar series

With the issuance of ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” in June 2016, the Financial Accounting Standards Board (FASB) replaced the incurred-loss model of estimating credit losses with the current expected credit loss (CECL) model.

For more information on what CECL is and who will be impacted, check out Understanding CECL: The basics

For financial institutions, this new accounting model is the most significant financial reporting change in decades. Beginning in April, we hope you’ll join us for a live, five-part webinar series that breaks CECL down in an easy-to-understand format.

Hosted by Corporate One, Accolade, and Crowe Horwath LLP, this webinar series will be comprehensive yet digestible, reviewing important aspects your credit union will need to understand to remain compliant and successful.

  • April 12: Introduction to CECL. This first session will cover the CECL transition framework and methodologies.
  • April 26: Risk Identification. We’ll take a closer look at risk identification within the transition framework. In applying CECL, it is critical to understand portfolio characteristics and key drivers of portfolio performance, including lending attributes, loan structures, prepayment risks and changes in the macroeconomic environment. Risk identification will enable the credit union to appropriately segment and model the portfolios based on common drivers of risk.
  • May 2: Data Inventory. Examine data inventory within the transition framework. Data inventory includes the reliability and accuracy of data elements in addition to the historical time horizon of data availability. Understanding the availability and limitations of data to develop and maintain an effective CECL model is critical.
  • May 26: Modeling Approaches. This session will discuss models to apply the methodology changes under CECL. There are loss-rate models and component loss models. We will review examples of each. Examples of loss-rate models include open pool-cumulative credit loss and closed pool – vintage/static pool. Examples of component loss models include probability of default, loss given default/severity, exposure at default, and discounted cash flow.
  • June 7: Qualitative Factors and Reasonable and Supportable Forecasts. This last session will discuss and review existing qualitative factors and also discuss new considerations under the ASU.

Who should attend?

One of the overall goals of the webinar series is to help your credit union establish a “CECL committee.” Collaboration between departments is key to being fully prepared for the new rules. The people who should attend the webinar series and be on your CECL committee include staff from the following departments:

  • Accounting
  • Lending
  • IT
  • Risk
  • Audit

We’ll talk more about establishing your own CECL committee in the first webinar, Introduction to CECL.

While CECL is beneficial and will ultimately strengthen credit unions overall, the new rules transform credit-risk management from a reactive, reduce-loan-loss impact approach to a more proactive, preventative approach. The time is now to make sure your credit union is ready when the new rules begin to take effect in 2019.