The Key to a Successful Transition
A successful transition program will leverage your institution’s existing processes and tools, facilitate collaboration between your stakeholders and offer options and access to technology. The FDIC recommends that senior management, under the oversight of the board of directors, work closely with staff in their accounting, lending, credit risk management, internal audit and information technology functions during the transition period leading up to and beyond CECL’s effective date.
Another key to success will be for your team to fully understand and own CECL, even if you work with an outside service provider. Regulators are being very flexible regarding CECL implementation, allowing institutions a lot of leeway in deciding how to forecast credit losses. If your in-house team is knowledgeable about the purpose and objectives of the new accounting standard, it will be easier to design a CECL program that is tailor-made for your institution’s specific needs.
Transitioning to CECL successfully will require much more than just a CECL-compliant estimate. Success will require taking an integrated view of the end-to-end reserving process and leveraging the right tools and the right people to get the job done efficiently and effectively.
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