As we approach the end of the first quarter of 2020, many public companies will be reporting for the first time, the impact on reserves for Current Expected Credit Losses (CECL) within their financial statements. The estimation of CECL reserves is new and complicated since credit deterioration must consider both current economic conditions, as well as forecasts that are reasonable and supportable. Currently, forecasts are becoming much more difficult to estimate given the rapidly changing environment caused by the coronavirus (COVID-19). Given the levels of economic uncertainty demonstrated in the public markets and the unknown ultimate impact of COVID-19, using informed judgment to measure credit deterioration as part of the CECL reserves will require even more thought and analysis.
Please join us for a discussion on how best to consider the impact of COVID-19 on CECL for the current quarter end.
Schedule: 12:00 p.m. - 1:00 p.m. (EDT)
- What impact will COVID-19 have on the general economic environment?
- Will COVID-19 lead to credit deterioration in the marketplace?
- Should preparers consider COVID-19 within their CECL reserves?
- How can it be determined that a credit deterioration of the financial instruments has occurred?
- What factors should preparers consider when evaluating the impact of COVID-19 on their CECL reserves, in the short-term and long-term horizon periods?
- How should preparers develop forecasts considering the impact of the COVID-19, including the underlying economic and value assumptions utilized in measuring credit deterioration?
- Can you reasonably arrive at probabilistic weights to forecasts to appropriately consider the impact of COVID-19 on the estimated credit deterioration in determining the CECL reserve?