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AICPA National Conference for Banks and Savings Institutions

RFP
Grant Thornton LLP’s Banking and Securities practice provides insights and solutions to today’s challenges. In this time of increased public scrutiny and complex regulatory demands, banks, thrifts and other financial institutions need straightforward business guidance, delivered ethically and professionally. We focus on what matters to you, including responding to evolving regulatory requirements, managing and optimizing risks, and navigating complex transactions.

Our presence at the AICPA conference will focus on allowance for loan and lease losses (ALLL) and current expected credit loss (CECL). This represents a monumental change for financial institutions and affects banks of varying sizes. Grant Thornton’s professionals can assist your organization in both managing risk surrounding existing ALLL models and managing the challenges of the transition to CECL. We assist organizations of any size with governance and internal controls, implementation plan development and project management office services, model reviews and validations, accounting consulting services, and model development and operational testing. Hear from our subject matter experts on critical implementation considerations. For additional information, please contact:

Graham Dyer
Partner
Financial Services
T +1 214 561 2370

Jeff Honeycutt
Partner
Financial Services
T 1 704 632 6812

Dorsey Baskin
Retired Partner
Financial Services
T +1 214 240 5515

Speaker Sessions

Wednesday September 21
3:30 – 4:45 pm — Concurrent Session #9
ALLL: Current Documentation and Observations

Graham Dyer, Partner – National Professional Standards, Grant Thornton
Sydney Menefee, Deputy Chief Accountant, Office of the Comptroller of the Currency
Though the CECL model will change the ALLL, the earliest effective date is 2020, which means banks and thrifts still have at least four years of using current GAAP. While banks and thrifts are preparing for CECL, the focus on the current ALLL methodology, including robust documentation, should be maintained. In addition to exploring current trends, this session will cover qualitative adjustment factors and the relationships with other components of a typical ALLL computation model. The importance of documentation of the factors, their development and use will be explored.

Thursday September 22
7:30 – 8:20 am — Breakfast session #203
CECL Governance: The Role of the Board

Dorsey Baskin, Retired Partner Grant Thornton
The session will focus on:
  • The integral role of the board of directors and its committees, such as the audit committee and risk committee, in a successful implementation of CECL
  • Practical matters, such as model governance, data governance, and the top 10 questions the board should be asking regarding management’s plan

Thoughtware

  1. Measuring Credit Losses on Financial Instruments
    This bulletin summarizes the guidance in ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 adds a new Topic 326 to the codification and removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables and held-to-maturity debt securities.
  2. ALLL — Historical Loss Calculation
    The ALLL for a lender typically has several components. The primary components consist of loans collectively evaluated for impairment (or the FAS 5 component), loans individually evaluated for impairment (or the FAS 114 component) and loans acquired with deteriorated credit quality (or the SOP 03-3 component). This paper focuses on the FAS 5 component of the allowance.
  3. ALLL Loss Discovery Periods
    This paper delves deeper into FAS 5, one of the major ALLL components. This component is often the largest and is for loans that have not been individually identified as being impaired. Loss discovery periods (LDPs) are very important factors in the FAS 5 estimation methodology and are a powerful tool for management. In addition to informing the calculation of the ALLL, we believe that tracking average LDPs for different types of loans will provide useful information for management in understanding whether changes need to be made to underwriting and loan administration.
  4. Profits From Losses: 4 Ways Banks Can Use ALLL Data to Improve Operations and Boost Earnings
    ALLL is one of the most important and complex estimates a bank makes. An appropriate ALLL estimate is essential to the integrity of a bank’s financial statements and integral to its credit risk management process.

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