Why The Next Big Banking Regulation Is Putting Excel In the Spotlight


A FASB standard known as CECL is putting pressure on financial services firms, but those with spreadsheet skills are ready for the challenge.


There are probably those in banking who dread the forthcoming Current Expected Credit Loss standard, and those who are leaning into it. Guess who will most likely achieve compliance faster and more easily?


For those who don’t work directly in financial services, CECL is putting new requirements on CFOs and their teams to consider reasonable and supportable forecasts into a forward-looking credit loss estimate, rather than relying on past events and current conditions. As with any regulation, there is theoretically plenty of time to prepare. Those banks who are registered with the U.S. Securities and Exchange Commission have until 2020 and others will have an additional year to comply.

According to a recent survey conducted by the American Institute of CPAs, 83 percent of bankers believe CECL will have a substantial impact on policies, procedures and technology, or could even be the biggest change to bank accounting ever.


When American Banker looked at the issue a few months back, however, it noted that a very familiar application will likely come to the rescue to finance departments yet again.


“FDIC Chief Accountant Robert Storch, responding to a question, implied that the impact of applying CECL on a bank’s current ‘incurred loss’ model for calculating loan-loss provisions was minor,” the article said. “If you have a fairly straightforward approach today, even using Excel spreadsheets and so forth, there is an expectation that you should be able to continue to use that type of an approach.”


In fact, CECL is a good example of where finance professionals not only show how they’re ready to rise to the occasion, but demonstrate their loyalty to Excel spreadsheets in doing so. Take the following example from a story on BankingExchange:


Not every CFO is convinced that CECL will be too great a task for an internally built spreadsheet. L. Kirk Billingsley, CFO at Allegheny Bancshares Inc., fought against CECL the entire time he was a member of the FASB Small Business Advisory Committee. But now that the standard has been finalized, he is going to try to build a spreadsheet to accommodate the new model.


“Try” might be the operative word, but Billingsley sounded optimistic. He said building the spreadsheet may involve “some math and some head-scratching” but said he enjoys figuring out problems.


While the AIC survey said 47% of banks are worried about the volume of data CECL could force them to manage, that’s also a good reminder that with the right technology in place, Excel can scale up accordingly – continuing to let CFOs solve problems with the tool of their choice.



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