Industry Letter

Industry Letter CECL Readiness Checklist Tool

Date: 09/21/2017
Referenced Sources: CSBS Readiness Tool and state bank examiner guides

Letter to regulated financial institutions regarding the CECL Readiness Checklist Tool

To: Regulated Financial Institutions,

The Conference of State Bank Supervisors (CSBS) has developed a tool to help financial institutions prepare for the changes associated with the Financial Accounting Standards Board's (FASB) release of Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326) commonly referred to as the Current Expected Credit Losses (CECL) method. The tool was developed to provide a framework that a financial institution could use to plan for these accounting changes. CECL will have a significant impact on the way a financial institution estimates and provides for credit losses. It is prudent for institutions to start planning as soon as possible to adopt CECL in an orderly manner.

There is no regulatory expectation from the Massachusetts Division of Banks that this tool is used. It is simply offered as an optional resource to plan and prepare for the implementation of CECL. The suggested dates in the tool are suggestions only and are not regulatory expectations or deadlines. The tool does not replace or revise any agency guidance related to CECL, nor should it replace advice your institution may receive from your auditor or accounting experts.

This optional tool was developed in response to comments from financial institutions, particularly small, noncomplex financial institutions, that a set of steps to prepare for CECL would be helpful. Accordingly, the 14 steps provided in the tool represent one possible path a financial institution management team could take to prepare for this change. At its core, the tool encourages early research, data maintenance, and communication amongst members of a financial institution’s management team.

CSBS made the CECL Readiness Tool and an associated guide for state bank examiners available.

If you have questions, comments, or feedback about the tool, please contact me or you may e-mail Kyle Thomas and Mary Beth Quist at CSBS.

The Division of Banks understands that each financial institution’s approach to implementing CECL will be unique. In that regard, we hope this tool provides sufficient flexibility for most institutions to begin the planning process. We will continue to work with other state and federal agencies, through the CSBS, as well as the Federal Reserve Bank of Boston and the FDIC, to provide timely guidance and other materials as the implementation dates approach.

In addition, for your reference, the previously-released “Joint Statement on the New Accounting Standard on Financial Instruments - Credit Losses” is available.

Thank you, 


Michael T. Hensler

Chief Director of Bank Supervision



Referenced Sources:


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