Insight

Accounting change CECL survey

Banks, insurance companies, and specialty finance organizations need to quickly transition from assessment to implementation when addressing the CECL standard. How do your implementation efforts compare to your peers?

Accounting and Credit Risk executives are facing unanticipated challenges when preparing to comply with the CECL (Current Expected Credit Loss) standard. Overall progress is being made towards the implementation, but there is widespread uncertainty regarding key decisions concerning CECL accounting and modeling. These areas are showing overall implementation delays. 

As part of our annual accounting change survey series, KPMG has released our 2017 CECL Survey. We surveyed banks, insurance companies, and specialty finance companies in June of 2017 to assess progress toward implementation of the CECL standard and to gain insights into the issues and concerns of the institutions affected.

Key findings:

  • Regardless of sector, 67% of institutions are still in the assessment phase and have not moved forward towards implementation.
  • Insurers need to get caught up quickly on best practices to address the standard as 89% of respondents said they are still in assessment in comparison to 64% of banking respondents.
  • With unexpected implementation challenges, 49% of survey respondents, regardless of asset size, stated that they are not able to estimate their total CECL implementation cost.
  • Respondents stated that the top three downstream business impacts that will result from CECL for their organizations are income volatility (70%), regulatory capital (52%), and asset liability matching/management (28%).
  • Overall 73% of respondents estimate that their exisiting allowance for credit losses will increase between 21-60% once CECL becomes effective.