Benefits and Challenges of the “CECL” Approach

Abstract: This note provides an overview of the Current Expected Credit Loss ("CECL") accounting approach for credit losses. It also discusses the potential benefits and challenges of the CECL approach to financial institutions and users of their financial statements.

Keywords: accounting standards; CECL; current expected credit losses; procyclicality; incurred loss; allowance for credit losses; loans; debt securities; financial modelling;

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Bibliographic Information

Provider: Federal Reserve Bank of Boston

Part of Series: Supervisory Research and Analysis Notes

Publication Date: 2019-03-08

Issue: 01

Pages: 12