By: Alex Driscoll
During the 2017 Financial Institutions Conference, Lauren Smith, director of Accounting Policy and Research at SS&C Primatics, participated in the CECL Implementation Strategies Panel. During the session, panelists discussed their experience working with banks as they transition to the CECL reserving standard, which takes effect in 2020 for SEC filers and 2021 for all others.
After working with and speaking to hundreds of banks across the U.S. about CECL, SS&C Primatics has noticed certain common themes across the industry. One such trend involves the looming 2020 deadline for SEC registrants. While over half (64 percent) of respondents said they plan to process in parallel for 12 or more months before fully transitioning to the new standard, only eight percent of companies are actively implementing CECL requirements today. As solutions will need to be implemented before parallel processing begins, the survey results shine a light on the urgency that will ensue in 2018.
During the session, Lauren discussed a variety of challenges such as data, models, and reporting that banks focus on when starting their CECL implementation projects. However, Lauren emphasized the importance of maintaining the big picture and taking a holistic approach.
“When banks approach us for a CECL reserving solution, they have often zeroed in on one particular aspect of the standard, such as models or data. However, we strongly encourage our clients to think about the project holistically, because a holistic approach will be necessary for a successful implementation.”
In closing, Lauren discussed the importance of integrating model outputs with reporting and analytics such that preparers can easily attribute changes in the reserve to the model parameters. Because CECL expands the drivers of change in the reserve to include forecastable conditions, reporting and analytics will be more critical than ever to explain a potentially volatile estimate to stakeholders.
A holistic approach will be critical to a successful CECL implementation, and EVOLV is the only integrated risk and finance solution that holistically addresses the end-to-end reserving process in a SOX-controlled manner. For additional information, download our brochure or contact us for a demo at firstname.lastname@example.org or 800-234-0556.