New CECL FAQ’s Released

Additional and updated frequently asked questions on the new accounting standard on financial instruments–credit losses has been released.

The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit Union Administration, are collectively publishing additional frequently asked questions to assist financial institutions and examiners with the new accounting standards.

Highlights from the new FAQ’s
• Consideration of stress testing models, scenarios, and forecast periods when forecasting future economic conditions for CECL.
• Accounting implementation issues related to expected future changes in collateral when using the collateral-dependent practical expedient.
• Borrower payment behaviors as a risk characteristic for credit card portfolios.
• Internal control considerations for CECL implementation.
• Clarification of the agencies’ use of the term “smaller and less complex” related to the scalability of CECL.
• Concepts in existing interagency policy statements related to the allowance for loan and lease losses that remain relevant.

Click Here to Read Full Document 

A CECL Webinar is being held on April 11, 2019, at 2 p.m. and will cover the significant differences financial institutions should expect in their accounting procedures following the CECL changes, scheduled for 2022. The webinar will focus on how CECL changes will affect smaller institutions and will include a detailed discussion of the weighted average remaining maturity method for estimating the allowance for credit losses. There will be a question-and-answer session, and participants also may submit questions in advance at rapid@stls.frb.org.

Register for Webinar