by
Catalyst Corporate | Nov 07, 2022
Current Expected Credit Loss, FASB’s new accounting standard for estimating loan losses, is quickly headed down the track. Known as CECL, the new standard takes effect January 1, 2023.
CECL will change how credit unions account for expected credit losses. Instead of calculating bad debt reserve based on years past, CECL will require credit unions to calculate bad debt using forward-looking, predictive information. Credit unions will have to evaluate their potential credit losses and make an allowance for the total expected credit losses over the life of their loans.
Credit unions that have not yet established a CECL solution can find a partner with Catalyst Strategic Solutions. Their robust, self-directed online platform – CECLution.org – is designed to help credit unions respond to CECL accounting requirements.
“Credit unions should be in the process of evaluating solutions and determining the most appropriate type of modeling,” said Mark DeBree, Managing Principal of Catalyst Strategic Solutions. “CECLution is ideal for small to mid-sized credit unions and larger credit unions with limited complexity.”
The user-friendly platform offers credit unions several benefits:
- Captures and maintains historical data
- Automatically integrates economic data
- Displays credit union and peer data
- Enables fully customizable Q-factors and carve-outs
- Preserves core assumptions for easy updates
- Saves and stores forecasts
“CECLution was built to meet credit unions’ unique needs for compliance, affordability and efficiency,” DeBree said. “For example, each time a new quarterly call report is filed, the credit union’s data is uploaded automatically to the CECLution platform. In addition, aggregation and storage of historical data eliminates the task of extracting and forwarding data with every report. Having access to all this data allows credit unions to see forecasted loan losses compared to historical loan losses.”
CECLution is an independent, fast and flexible alternative to in-house solutions. The user-friendly platform gives credit unions the opportunity to customize inputs that accommodate different assumptions. It is provided on a subscription basis that permits credit unions unlimited access to the platform.
Because of the significance of this accounting change, credit unions should assess the economic impact on their balance sheets as soon as possible.
Catalyst Strategic Solutions is ready to partner with your credit union to plan and implement CECL compliance strategies. To find out how CECLution can help simplify the impending transition, contact us or schedule a demo today.