In light of the pending proposal by the Financial Accounting Standards Board to postpone the implementation deadline of the Current Expected Credit Loss standard for certain institutions to 2023, senior federal accountants warned banks not to rest on their laurels in implementing CECL. Instead, banks should use this extra time to make forecasts, run parallel processes, set up or change internal controls, and "generally integrate CECL's business results into business processes," FDIC Chief Accountant Robert Storch said yesterday at a conference of the American Institute of CPAs.
While the institutions have made progress in implementing the CECL standard, Stork noted that about a third of the smaller Community institutions have not yet developed an implementation plan. Among the larger listed banks that must comply by 2020, OCC Chief Accountant Sydney Menefee noted that some "lag behind their own" in terms of model development and validation. until the effective date of 2020. The need for more time for banks of all sizes is one of the many reasons why the American Bankers Association continues to push for a delay in CECL implementation.
For years, ABA has voiced numerous concerns about the procyclical nature of the CECL standard and its potential to negatively impact credit availability in an economic downturn. The association has asked the FASB to extend the proposed delay to all banks. The Association continues to advocate bipartisan legislation that has been introduced both in the House and in the Senate and would stop the implementation of the CECL until a quantitative impact analysis can be conducted.
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