Current challenges in reporting and disclosures for CECL

Current challenges in reporting and disclosures for CECL

By Lauren Smith , Director of Accounting Policy and Research , SS&C

Could you please tell our readers a little bit about yourself, your experience and what your current professional focus is?

I am the Director of Accounting Policy and Research at SS&C Primatics. Before joining SS&C Primatics, I was an auditor with Deloitte. Over the last several years I have been focused on IFRS 9 Impairment and CECL, working directly with clients during implementation.

What, for you, are the benefits of attending a conference like the CECL Congress and what can attendees expect to learn from your session?

I think there are many benefits to attending conferences similar to CECL Congress. It is especially helpful for institutions in various stages of the transition to gather with their peers and share best practices and lessons learned as they work through some of the more nuanced aspects of the transition.

What are the current challenges in reporting and disclosures for CECL and how can Financial Institutions overcome this?

CECL will exacerbate many of the reporting challenges that institutions face today. These challenges can be addressed through a proper reporting framework – one that integrates the data inputs and quantifies the change in expected credit losses at the instrument level. Attribution reports, for example, will be especially helpful in addressing stakeholder questions because they isolate and quantify the impact of individual variables affecting the reserve.

What lessons can be learnt from IFRS 9 implementation?

Be prepared for an iterative process, even after adoption. Translating the conceptual to the operational can sometimes reveal unintended consequences and further questions. Similar to the IASB, the FASB has continued to work through implementation concerns during the CECL Transition Resource Group meetings. Industry-accepted best practices will continue to evolve well after initial adoption.

In your opinion, what are the best practices FIs can undertake for ensuring successful CECL implementation?

Think beyond compliance. The basis of a successful CECL transition will require much more than a compliant estimate. Success will require taking a holistic view of the end-to-end reserving process and leveraging the right tools to get the job done efficiently and effectively.

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