Applying the CECL model to financial asset credit losses

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10/22/24 • 44 min

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PwC's accounting podcast

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We continue our miniseries on loans and investments with a discussion of the current expected credit losses (CECL) impairment model, applicable to a broad range of financial assets.
In this episode, we discuss:

3:42 – A refresher on the CECL model
8:02 – Impact of the current economic environment on credit losses
23:43 – Monitoring and governance of credit losses
26:46 – SEC comment letters and other activity related to CECL
30:49 – FASB developments related to CECL, including purchased financial assets

For more information, see chapter 7 of our Loans and investments guide. Also, check out our other episodes in this miniseries, Accounting for debt securities held by corporates and Accounting for loan receivables by corporates. Additionally, follow this podcast on your favorite podcast app for more episodes.
Catherine Espino is a partner in PwC’s National Office with 20 years of experience serving large financial institutions, broker-dealers, as well as smaller subsidiaries and private companies. Catherine focuses on advising companies within the financial services and non-financial services sectors on significant and complex accounting issues.
Bret Dooley is a Deputy Chief Accountant in PwC’s National Office who leads teams focused on the financial services sectors and accounting for financial instruments. He has over 25 years of experience in the financial services, banking, and capital markets industries. Bret focuses on emerging financial reporting issues related to financial instruments, developing interpretive guidance, and assisting clients in resolving complex accounting matters.
Heather Horn is the PwC National Office Sustainability and Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series.
Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to [email protected].

Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

3:42 – A refresher on the CECL model
8:02 – Impact of the current economic environment on credit losses
23:43 – Monitoring and governance of credit losses
26:46 – SEC comment letters and other activity related to CECL
30:49 – FASB developments related to CECL, including purchased financial assets

Previous Episode

Talking ESG: Revisiting ESG to enhance value and drive growth

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The term “ESG” has been used for over two decades, including in this podcast miniseries title. Host Heather Horn sat down with guest Matt Sekol, Sustainability Global Blackbeltand author of ESG Mindset: Business Resilience and Sustainable Growth, to revisit the complexities of ESG and how companies can rethink the concept to not only build better resilience for the long term, but also find value in reporting.
In this episode, they discuss:

3:42 – The key messages of ESG Mindset and redefining “ESG”
9:44 – How sustainability reporting can contribute to change
12:26 – What leaders can do to leverage ESG in a material way
20:06 – How companies can strike a balance between ESG and the success of the business
35:19 – The interconnectedness of ESG and the macroeconomic environment
45:12 – Key takeaway for addressing systemic ESG issues

Looking for the latest developments in sustainability reporting? Follow this podcast on your favorite podcast app and subscribe to our weekly newsletter to stay in the loop for the latest thought leadership on sustainability standards.
Matthew Sekol is a Sustainability Global Black Belt on Microsoft’s Cross-Industry team and a Senior Advisor for Enzo Advisors. In 2024, Matthew released a book called ESG Mindset, which is a guide for companies to think critically about ESG and take a holistic approach to the business. He serves on the LP Advisory Committee of Morgan Stanley’s Next Level Fund, which invests in diverse-led and founded startups. Matthew is considered a benevolent troublemaker who guides companies and partners to think through and address their most material issues on their path to impact.
Heather Horn is the PwC National Office Sustainability and Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series.
Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to [email protected].

Next Episode

Talking ESG: Can AI be sustainable?

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At the intersection of two trending topics, AI and sustainability, there are a myriad of both costs and benefits to consider. Host Heather Horn is joined by Scott Likens, PwC Global Chief AI Engineer, to discuss the environmental impact of AI and the balance between AI's benefits and its environmental footprint.
In this episode, they discuss:

3:17 – How AI is impacting sustainability
8:54 – Why AI and sustainability aren’t necessarily opposing forces
17:28 – Practical examples of utilizing AI to optimize energy usage
28:22 – The broader benefits of using AI to impact sustainability
31:05 – Balancing AI’s benefits with its environmental footprint
38:32 – Advice for both companies and individuals leveraging AI

Looking for more on AI? Check out PwC’s Artificial Intelligence services as well as resources on responsible AI, including What is responsible AI and how can it help harness trusted generative AI?

Scott Likens is the Global and US Chief AI Engineer leading and overseeing the AI Engineering and Emerging Technology teams in the United States. With more than 30 years of emerging technology experience, he has helped clients transform their customer experience and enhance their digital operations across all aspects of their business.
Heather Horn is the PwC National Office Sustainability and Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series.
Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to [email protected].