CECL: Top 10 Organizational Impacts

  CECL is an acronym for Current Expected Credit Losses, and is used as shorthand for the new GAAP requirement to include expected life of loan (LOL) losses in the allowance for loan and lease losses (ALLL) for instruments held at amortized cost, versus the current incurred loss model. This is a very significant change for banks holding held to maturity (HTM) loans and securities.  Given the impact on financial institutions, roll-out of this standard has been slow, and the implementation time-frame is extended. For calendar year-end companies, implementation is required for the fiscal year 2020 for public companies that are SEC filers, and 2021 for everyone else. Early adoption is permitted starting in 2019. Upon implementation, the cumulative effect will be recorded as an adjustment to retained earnings (no income statement impact).