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Survey: Banks not preparing enough for CECL standard

Tammy Whitehouse | May 9, 2017

Banks are not yet prepared for pending new requirements on how to reflect potential loan losses in financial statements and don’t even agree on the significance of the change associated with the new rules, according to a recent survey by RapidRatings and Compliance Week.

In a poll of representatives at more than 100 financial institutions of varying sizes, only 23 percent said they had a plan in place for how to comply with a requirement from the Financial Accounting Standards Board directing them by 2020 to use a more forward-looking approach to project current expected credit losses (CECL) resulting from their loan portfolios. Another 28 percent said they did not have the data and model ready to comply with the standard, and 32 percent said they weren’t sure.

Despite expert predictions that new methods of reserving for loan losses would represent a seismic shift in bank accounting processes, banks of all sizes have divergent views on the significance of the new... To get the full story, subscribe now.