The Financial Accounting Standard Board’s Current Expected Credit Loss (CECL) standard will go into effect at the beginning of the next fiscal year for most public companies. Under CECL, companies will be required to measure expected losses over the estimated life of a loan using reasonable and supportable economic forecasts.
One of the most crucial aspects of compliance with CECL will be disclosing the standard’s impact on investors and analysts. The onus for doing so will primarily fall on CFOs, who will need to develop the right disclosure approach to help communicate effectively with each stakeholder group.
With less than three months until the first reporting period for public companies, CFOs will need to step up their CECL methodology and be prepared to deliver their organization’s disclosure story effectively next spring.