The CECL Blueprint: Your Roadmap to CECL Compliance
**Please check our most recent blog post regarding the latest changes to the FASB deadlines.**
In our January 26, 2017 webinar on CECL preparedness, 85 percent of attendees reported they didn’t have sufficient data for a CECL-compliant allowance solution and 65 percent said they will seek assistance in their transition to CECL. While those figures are somewhat inflated in that they reflect the needs of lenders who signed up for the instructional webinar, they are still startling. Such industry-wide need for assistance is why Abrigo assembled a team of allowance experts and established Abrigo Advisory.
ABRIGO CECL Blueprint Tailored to Your Financial Institution
The Abrigo Advisory CECL Blueprint is a roadmap, a multi-year implementation and methodology strategy leading toward CECL compliance. The Blueprint is designed around an examination and understanding of the lender’s current status and needs, and addresses them with expertise in the four disciplines essential to developing a compliant CECL solution: accounting, modeling, economics and engineering. We work with you to guide your institution through the development of a CECL-compliant methodology, including:
- A plan for managing implementation through the initial reporting periods
- Gap analyses
- Methodology options & recommendations
- Implementation of the chosen method(s)
The Abrigo Advisory CECL Blueprint process includes:
- Examination of your current ALLL policies, processes and procedures to ensure a clean, efficient, reconcilable methodology in place to run your allowance systems
- Assistance with documentation of internal controls over your processes and procedures
- Examination of your current available data: the quality and quantity of your data and data fields to ensure you have data appropriate for pooling segmentation
- Data mapping to ensure your data is being parsed and added into your allowance system correctly
- A review of your historical data to assure sufficient availability for life-of-loan and business-cycle computations, to minimize distortion, to identify the credit risk indicators in your portfolios, and to understand such influences as the implications of rising interest rates on your allowance
- Analysis of collateral values and recoveries and how they impact risk in your portfolios
- Analysis of aging, charge-off and recovery data to determine if you have that information available and appropriately segregated
- Examination of underwriting processes, methodologies and change history to understand where changes in underwriting standards have occurred and how they impact quality and comparability of data
- Pooling analysis to balance your loan pools for manageable sizes and to minimize volatility under CECL
- Gap analysis to assess available data for various modeling options and document what can and can’t be accomplished given your available data
- Documentation from your initial assumptions to data assessment and reconciliation to final CECL compliance determinations; reports that are understandable and can be used by board members and other institution executives for decision-making
- Develop a timeline to accomplishing your identified goals en route to CECL implementation
- A roadmap to analyze, reconcile and document your CECL processes to manage volatility, accommodate ongoing change and enhance your analytics over time
