Current Expected Credit Losses (CECL) Methodology
The Financial Accounting Standards Board (FASB) issued a new expected credit loss accounting standard in June 2016. The new accounting standard introduces the current expected credit losses methodology (CECL) for estimating allowances for credit losses. The standard is effective for SEC filers in fiscal years and interim periods beginning after December 15, 2019. For public business entities that are not SEC filers, the standard takes effect in fiscal years and interim periods beginning after December 15, 2020. For an entity that is not a public business entity, it takes effect in fiscal years beginning after December 15, 2021.
Until the new standard becomes effective, institutions should follow current U.S. GAAP along with the related supervisory guidance on the allowance for loan and lease losses (ALLL).
For more information, please contact the OCC’s Office of the Chief Accountant by email at CECL@occ.treas.gov.
CECL Webinar Series
In 2017, the OCC began hosting a series of webinars on CECL. The webinars are for OCC-regulated institutions only. Registration for upcoming webinars and recordings of past webinars are posted on BankNet.
- Part 8: The Weighted Average Remaining Maturity Method for estimating credit losses – March 7, 2019
- Part 7: The Halfway Point – October 18, 2018
- Part 6: Purchased Credit Deteriorated Loans – Prerecorded Webcast
- Part 5: Third-Party Risk Management & CECL – April 26, 2018
- Part 4: Data and Methods – February 15, 2018
- Part 3: Debt Securities – August 22, 2017
- Part 2: Implementation Considerations – May 23, 2017
- Part 1: Introducing CECL – March 23, 2017
- Applying Model Risk Management to CECL Models at Large Banks - September 3, 2019: Invitation (PDF) – For a transcript of the webinar please refer to the Federal Reserve's website.
- Weighted Average Remaining Maturity (WARM) Method – April 11, 2019: Invitation (PDF) – For a transcript of the webinar please refer to the Federal Reserve's website.
- CECL Q&A Webinar for Community Bankers – July 30, 2018: Invitation (PDF) – For a transcript of the webinar please refer to the Federal Reserve’s website.
Related Links & Resources
- FASB Staff Q&A No. 1 - Whether the WARM Method is an Acceptable Method to Estimate Expected Credit Losses
- FASB Staff Q&A No. 2 - Developing an Estimate of Expected Credit Losses on Financial Assets
- Frequently Asked Questions about the Current Expected Credit Loss (CECL) Model
- ASU 2016-13 -- Financial Instruments -- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
- OCC 2016-21 -- Joint Statement on the New Accounting Standard on Financial Instruments - Credit Losses (PDF)
- OCC Bulletin 2019-17, Current Expected Credit Losses: Additional and Updated Interagency Frequently Asked Questions on the New Accounting Standard on Financial Instruments - Credit Losses