Think global, act local
Think global, act local
CLIENT STORY

Think global, act local

KPMG helped a Dutch-based bank prepare to measure and report estimated credit losses in compliance with new U.S. CECL requirements.

Client
A Dutch bank
Sector
Financial services
Project
Accounting change - CECL

 

U.S. International Corridors

  • Client challenge
  • Benefits to client
  • Approach
  • KPMG insights

Client challenge

Accounting for credit risk traditionally looks back, at events that have already occurred. So, when International and then U.S. accounting regulators created new sets of forward looking credit-risk rules, it was not just a matter of creating different reports, but also one of adopting a new accounting mindset. For this Dutch commercial bank with U.S. operations, it was a double challenge: building a response that would both comply with U.S. rules, and co-exist with solutions implemented earlier at the holding company level in Europe. KPMG was invited to help the bank address the new U.S. rules.

Working with KPMG, the bank re-examined its credit risk models, processes, data needs and reporting capabilities, making changes informed by its European solutions. More importantly, KPMG helped the bank acquire new cross-border awareness, and lead the way in practicing what many organizations preach – “think globally, act locally.”

Benefits to client

In responding to comparable, but-different, credit-risk reporting demands in Europe and the U.S., KPMG teams in the Netherlands and U.S. helped the organization respond in complementary ways to multiple regulatory stakeholders:

  • Accounting rule changes were developed for the U.S. that acknowledge and support precedents established earlier at the holding-company level in Europe.
  • Cooperation, connectivity, and communication was fostered and established between Dutch holding company and regional U.S. credit-risk, accounting, IT, financial reporting and data functions.
  • A foundation was established for future-state adoption of a centralized “data lake” model to support all reporting functions.
  • Chief Financial Officer and Chief Risk Officer teams were fully advised and equipped to manage adoption risks through the compliance-implementation pipeline.

Approach

KPMG teams in the Netherlands and U.S. worked to help the bank address new requirements for measuring and reporting estimated credit losses on loans and debt securities, as mandated by the Financial Accounting Standards Board’s rule (FASB CECL). KPMG:

  • conducted significant gap assessments to diagnose challenges and prioritize initiatives
  • designed top-to-bottom workstreams to address accounting, data modeling, risk analytics, process, data system technology, and financial reporting
  • prepared implementation roadmaps for newly-required documentation, systems buildout, systems and outcomes testing, and training
  • created new protocols and governance for data management, to support eventual establishment of a single, enterprise-wide “data lake".

KPMG insights

At the leading edge of accounting change, financial services clients want deeply experienced partners to help them navigate regulatory demands

We bring deep industry experience to every facet of our credit risk offer, with proprietary benchmarks, frameworks, and libraries specific tested roadmaps and tools – all specific to financial services.

 

Accounting demands include implicit organizational challenges

Clients appreciate our ability to advise them from a holistic, 360-degree perspective that includes how new data analytics, systems, and technology will impact their people.

 

Global organizations need global perspectives to address regulatory demands

We tap the insight gained from compliance assignments around the world, and use our up-to-date experience to cross-pollinate actionable insight from region to region.

It was not just a matter of creating different reports, but also one of adopting a new accounting mindset.

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