As 2023 filers look towards CECL adoption, two questions that continue to come up are
- “What type of qualitative adjustments will be required?”
- “What type of support will be needed to justify these adjustments?”
Generally, these questions arise from filers’ previous experience with ASC 450 where many banks and other financial institutions relied heavily on qualitative adjustments as a key component of their reserve numbers. Filers must also consider the added complexity of CECL and the greater audit and regulatory scrutiny that qualitative adjustments have historically received. In this blog we will explore these two questions.