Financial advisor meeting discussing risk and compliance

CECL Solutions

Solving your compliance needs. With an eye to the future.

Simplifying CECL with a flexible approach and full suite of services.

Baker Tilly | Simplifying CECL with a flexible approach and full suite of services.

Navigating the requirements of CECL isn’t inherent in all organizations. It’s complex. Time consuming. And there are many considerations. The Baker Tilly difference is a team of advisors who understand today’s regulatory hurdles AND has a savvy ability to use the right methodology, technology and modeling experience to not only achieve compliance, but to use your data to your strategic advantage.

Our full suite of CECL services

Implementation

Want a more strategic approach to the new standard? Baker Tilly CECL specialists achieve strategic insight by combining their deep industry knowledge in highly regulated financial service industries with their strong data science acumen and technology platform. The result is a custom solution that fits your business needs.

Outsourced modeling

When you need outsourced modeling resources to run periodic utilization on your CECL model, Baker Tilly CECL specialists are the ideal solution. Our Value Architects™ bring big data and technology know-how to help you with any adjustments to your model. Baker Tilly simplifies your regulatory stress with the specialists you need, when you need them.

Validation

Looking for independent validation for your model? Baker Tilly CECL specialists bring another level of credibility. Our team offers a deep bench of financial services industry knowledge and regulatory compliance, data science and technology know-how, as well as a track-record of validating CECL models. We are ideally situated to help you with your third-party model validation needs.

Value beyond compliance

Get more from your regulatory compliance efforts – build business value with additional testing, reviews and data analyses all using the same data you are already preparing for your CECL process. Our data scientists can identify other strategic insights that can be pulled from your existing data – saving you time and increasing the value of your compliance data.

CECL implementation and validation

For the most critical of all your financial calculations, you can trust Baker Tilly—without worrying about augmenting your staff with hard-to-find data scientists who are well versed in the technology needed to get the job done. More than compliance services, our Value Architects™ bring an advisory mindset that not only protects your value, but enhances it with a strategic lens to the future. Going beyond the typical one-size-fits-all approach, we customize our offerings, whether you need a full implementation or just specific issues addressed within your operations.

  • Implementation – where you are developing a new model that complies with the new CECL standard
  • Outsourced modeling – where you periodically bring in specialists to review and fine tune the model for streamlined utilization of your model
  • Independent validation – where you need an independent party to help you understand your key risks and validate the methods you’re employing in accordance with the policies and regulatory requirements (e.g., OCC, FDIC, FRB) specific to your organization

Our job is making your job easier and leaving you with the confidence you need.

Giving you the experience and tools you need to make the CECL transition more effective for your business.

Woman works on CECL implementation at the computer

On-demand webinar

CECL implementation

On Nov. 15, 2019, the Financial Accounting Standards Board (FASB) had updated the effective date of the CECL standard for certain small public companies and other private companies. The revised effective dates of the standard they updated at that time were as follows.

SEC filers, excluding smaller reporting companies (SRCs): Fiscal years beginning after Dec. 15, 2019

All other entities, including SRCs: Fiscal years beginning after Dec. 15, 2022 (1)

For calendar year entities adoption would be required on January 1, 2023.

The scope

The scope is broad and applies to many financial assets. The CECL methodology applies to the measurement of credit losses on financial assets measured at amortized cost, including:

  • Financing receivables
  • Held-to-maturity (HTM) debt securities
  • Receivables from revenue transactions within FASB Accounting Standards Codification (ASC) Topic No. 606, “Revenue From Contracts With Customers” or ASC 610, “Other Income”
  • Receivables from repurchase agreements and securities lending transactions
  • Reinsurance receivables

It also applies to off balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments, except for instruments within the scope of ASC 815, “Derivatives and Hedging”) and net investments in leases recognized by a lessor.

CECL Implementation Process

As the incurred loss model is being replaced with the current expected credit loss (CECL) model requires advance planning to calculate allowance for loan and lease losses (ALLL) more efficiently. It also brings change for your data collection processes. Our experience and tools of understanding and implementing this standard – and the requirements and deadlines that go with it – allows us to help you plan for and implement its adoption in your accounting and financial reporting and data collection.

Model Validation of CECL model or parallel run review

CECL is the largest accounting change the financial sector has seen in years. One of the biggest challenges is that it doesn’t have crystal-clear guidance. If you have already implemented/adopted CECL or currently running parallel runs of CECL model, you should consider having these CECL models independently reviewed and validated.

We’ve already helped a variety of banks and financial services companies confidently validate their CECL models. We can help yours, too.

Regulatory expectations

Baker Tilly model & credit risk professionals have a deep understanding of ALLL/CECL models, including:

  • Independent periodic model validation of CECL and other bank models (i.e. ALM/IRR, BSA/AML, Liquidity, etc.)
  • 2001 and 2006 policy statement requirements
  • Prohibition of external auditors from performing under independence requirements (for institutions with more than $500 million in assets)