KPMG’s CECL readiness assessment diagnostic tool
KPMG’s CECL readiness assessment diagnostic tool
Service

KPMG’s CECL readiness assessment diagnostic tool

KPMG LLP (KPMG) has developed a proprietary tool to help your readiness to adopt and implement Current Expected Credit Loss (CECL).

This diagnostic tool generates analysis based on your responses to a questionnaire. It will highlight where there are potential areas of weakness in your current status to implement CECL, allowing KPMG to suggest remedies or mitigations to address those issues. Through discussions with the accounting team, risk management team, and other operations across your business, we can attain a broad insight to provide you with key findings and a heat map report.

Readiness Heat Map

Scoping Questions

Accounting, Tax and Reporting

System and Process - System

System and Process - Data

Business Questions

People and Change Questions

The above heat map illustrates an example of how we can help provide a broad overview to organizations on the areas that require more attention when it comes to implementing CECL. The areas that are highlighted in red represent areas that require more focus.

Objective

he diagnostic outputs, which include the following areas of focus, are intended to provide actionable, prioritized recommendations to assist you in developing a more detailed plan for implementation:

  • Identifies potential accounting and reporting differences between a client’s current U.S. GAAP credit loss accounting policies/risk management practices and the proposed standards
  • Assesses a client’s current data aggregation process and identifies key data elements that are anticipated to be relevant for future reporting needs so that they can be incorporated/contemplated within the current aggregation process
  • Identifies potential adoption impacts to a client’s business, including the potential directional impact on reported financial performance and broader processes.

Methodology

The diagnostic assessment tool works on the inputs provided by the clients. It contains a predefined set of questions a KPMG representative answers through interviews with the client, and generates the client readiness heat map by considering the following rules:

  • Questionnaire has been categorized under various buckets, e.g., accounting and reporting, systems and processes, and business questions.
  • Questionnaire has been further bifurcated under questions that can have an impact on CECL implementation and others which are just to meet the data gathering objective.
  •  Possible answers to all questions marked with impact have been assigned weightage. The tool analyzes the client's answers based on this weightage and generates the heat map.
*Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates. KPMG Global Credit Loss Accounting (gCLAS™) services are not permissible for KPMG audit clients and their affiliates.