Allowance for Credit Losses | CECL Reviews

The CECL methodology replaces the Allowance for Loan and Lease Losses (ALLL) accounting standard, and all financial institutions, including small public companies, privately held banks, and credit unions, must adopt the standard for fiscal years starting after December 15, 2022 (effectively by January 1, 2023, for most institutions).

Maintaining a reserve to protect against potential credit losses is a federally mandated requirement for financial institutions. This requirement necessitates maintaining the ACL at an appropriate level and for documenting its analysis.

Young & Associates offers comprehensive Current Expected Credit Losses methodology reviews to help your organization confidently move forward with your credit functions. With our independent assessment of your methodology and processes, performed annually or biannually, your organization can validate its ACL reserve and ensure the soundness of your institution.

The Y&A Advantage

Young & Associates provides independent, third-party reviews of the CECL methodology of your allowance for credit losses accounting. Our guidance for your organization’s ACL policies and procedures ensures your decision-making is fully informed, and our team of experts has the regulatory expertise and industry experience to support your institution’s success. Contact us to learn more about our ACL review services.

Our ACL Review Process

By outsourcing reviews of your allowance for credit losses to Young & Associates, you gain the assurance that your financial institution’s loan loss reserve will meet regulatory requirements. During our review of your CECL methodology, Young & Associates will:

• Comply with the 2020 Interagency Policy Statement on Allowances for Credit Losses
• Validate your institution’s methodology for calculating its allowance for credit losses estimate
• Ensure your CECL accounting meets the latest GAAP standards
• Maintain up-to-the-minute knowledge of regulatory changes and additions
• Analyze your company’s documentation and procedures for adherence
• Evaluate your institution’s overall risk profile as it relates to relevant loss reserves

Through a comprehensive, thorough, and extensively documented procedure, Young & Associates can support your organization’s CECL accounting to ensure you can confidently meet any regulatory challenge. Contact us to learn more.