CECL Solutions
Solving your compliance needs - with an eye to the future. CECL modeling, validation, implementation and methodology expertise can all be found at Baker Tilly.
CECL Solutions
Simplifying CECL with a flexible approach and full suite of services
Navigating the requirements of current expected credit losses (CECL) isn’t easy for most organizations because it’s complex and time-consuming. Baker Tilly advisors understand today’s regulatory hurdles and have the right methodology, technology and modeling experience to help clients not only achieve compliance, but to use their data to their strategic advantage.
CECL services
Implementation
You need a more strategic approach to CECL
Navigating the implementation requirements of the CECL standard isn’t something most companies have the knowledge or resources to take on themselves. Due to its complexity and time commitment, it’s difficult to manage without an advisor who not only understands today’s regulatory hurdles, but also knows how to draw on the right methodology options, technology and modeling experience to use data to your strategic advantage. Baker Tilly is here to make it simple for you.
CECL doesn’t identify a specific model, so companies are responsible for selecting, implementing and justifying the models they select. CECL implementations are an enterprise-wide activity, and it is expected that senior management, risk, legal, IT, etc., will all be involved. To provide you with the best methodology and model options, our solutions can be customized to just those you need — at the level of involvement you want.
- Training – Educate your internal CECL team and key stakeholders to understand the new standard.
- Gap analysis – Understand your current situation and what areas you need to address.
- Data stratification – Segment your loan data to minimize your institution’s loan portfolio risk.
- Implementing a technology platform – Identify and implement the right technology platform to model your CECL estimate.
- Model selection and validation – Select the appropriate methodology option and model parallel runs using your data in our in-house modeling software.
- Governance, compliance and risk restructuring – Re-evaluate and enhance governance, compliance and risk policies.
- Internal controls testing – Evaluate and test your internal controls over financial reporting (ICFR).
CECL service bureau
Rely on Baker Tilly to provide a customized and straightforward path to CECL compliance. We will handle your data on an as-needed basis, while taking into account your size and complexity requirements. Not only can we run your model, but we are also a full-suite CPA firm providing you much needed simplification of the CECL process to ensure all compliance needs.
How it works
- You provide your data
- We assess the data then process it through the model that is right for you
- We provide you with the output of your data, meeting your regulatory compliance requirements
- Data is ready to report
Validation
Experienced independent CECL model validation services when you need it
Independent validation will be required for models developed in-house or by a third party. For most organizations, validation will be required at least annually. For your financial statement impact, a best practice is an annual or periodic validation to understand any material impacts.
Our CECL model validation can include a wide range of procedures including:
Model governance and compliance – Evaluate policies and controls to verify the framework is sound and regulatory requirements are met.
Data inputs – Verify the accuracy and cleanliness of data going into the model.
Model assumptions – Review the assumptions developed against the historic behavior of the portfolio and the economic projections expected.
Model methodology and testing – Fully replicate the model using your data and assumptions and our in-house CECL model to identify any variances.
When you are looking to an independent third party for CECL model validation, Baker Tilly CECL specialists bring another level of credibility. Our CECL specialists have experience in performing validations on all types of models, including popular and widely-used vendor software, as well as custom-built. Our broad expertise combined with our regulatory compliance knowledge, data science backgrounds and technology help challenge your model to proactively uncover problems and provide you with the needed insights to remediate or adjust the model if necessary. CECL is forward-thinking and your organization can be too.
Compliance+
Model assumptions – review the assumptions developed against the historic behavior of the portfolio and the economic projections expected.
Through the data and processes used to comply with the myriad regulations your organization faces, our regulatory compliance and data scientists can build value. We will help you understand opportunities for growth, recognize risks in more proactive ways and glean insight from the metrics to help you run your business through:
Loan portfolio reviews – Understand exactly what your loan portfolio is made of including major concentrations, origination and migration trends, and pricing movements.
Stress testing and scenario analysis – Analyze how your loan portfolio will perform under stressed economic and financial conditions and develop strategies to mitigate the increased risk.
Capital adequacy and stress-testing analysis – Assess the impact on your institution’s capital levels that would arise from immediate unfavorable conditions or increased concentration limits.
Back-testing and assumption testing – Leverage the historical data provided during year-over-year CECL validations to perform real-time back-testing to major assumptions.
Data quality – Identify gaps in stored data or address data quality issues for subsequent CECL reviews and enhance data and processes for other integrated risk assessments (ALM, budgeting, etc.)
Our solutions are tailored and customized … never cookie cutter
You deserve an advisor who listens. At Baker Tilly, that’s where we start.
For the most critical of all your financial calculations, you can trust us — without worrying about augmenting your staff with hard-to-find data scientists who are well versed in the technology needed to get the job done. Our CECL solutions advisors have the deep regulatory knowledge to evaluate your portfolio and its risks, challenge assumptions and offer suggestions that align with your overall business strategy now, and for the future.
We’re responsive, data-savvy and deeply immersed in CECL modeling and experienced in CECL methodology options, implementation and validation. It’s a combination few others can match.
Going beyond the typical one-size-fits-all approach, we customize our offerings to keep you ahead of the game by providing the experience and tools you need to make the CECL transition more effective for your business.
