Auditing/Accounting
-
Accounting Considerations for Visa Class B Conversions
This blog was authored by my colleague Scott Klitsch, the managing principal of the financial services quality group. Update as of April 16, 2024: Visa has formally issued their Prospectus on April 8, 2024. Holders of Visa Class B-1 shares have until 11:59 pm New York City time on May 3, 2024, to tender their […]
-
Impacts of the Initial Adoption of CECL
This blog was drafted by my colleague Tessa Brockie, a manager in our Financial Services Group. At the start of 2023, the vast majority of financial institutions adopted CECL. The impact of adoption varied for institutions based on asset size as well as the makeup of the loan portfolio. Although there are conclusions you can […]
-
Valuation Considerations for Financial Institutions
This blog was authored by my colleague Gwendolyn Duda, a signing director in our valuations, forensics, litigation, and investigations (VFLI) group. In a time of competitive economic conditions, valuations of financial institutions are increasingly instrumental for supporting business strategy decisions. Financial institutions continue to face near-term headwinds with rising inflation, rising interest rates leading to […]
-
Reporting Loan Modifications with the Implementation of CECL
As a part of the adoption of CECL, institutions are also adopting ASU 2022-02 Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures. This standard eliminates the concept of a troubled debt restructuring (TDR). As a result of this elimination, it removes the requirement to individually evaluate TDRs for impairment as CECL is already calculating lifetime losses for all loans in the portfolio. Under CECL, you are allowed to individually evaluate loans for allowance levels, but this evaluation is no longer predicated on the prior definition of an impaired loan. However, the standard did not eliminate the requirement for institutions to disclose information about loan modifications where the borrower is experiencing financial difficulty.
-
Occupational Fraud in Financial Institutions
This blog was authored by my colleague Kyle Shafer, a manager in our forensic services group. The bank failures have put the spotlight on financial institutions as a result of significant industry regulations. Financial institutions continue to be a target for fraud, but in the modern age of technology and digital advancements prevention and detection […]
-
CECL – Post Adoption Considerations
Over the last ten years, financial institutions have discussed and debated the Current Expected Credit Loss (CECL) accounting standard. Many of the larger financial institutions adopted the standard in 2020 with the majority of smaller, community financial institutions adopting on January 1, 2023. With adoption behind us, here are some items to consider during 2023 to position your financial institution for success in your next regulatory exam or external audit.
-
As Rates Continue to Increase, So Does Refinance Risk
When with a group of senior lenders and chief credit officers recently, the question was asked – what keeps you up at night? The answer: refinance risk. Simply put, refinance risk is the risk that a borrower will not be able to refinance their existing loan at favorable terms when it becomes due which could negatively impact their ability to repay the debt.
-
NCUA Announces Change to CECL Effective Date That Helps Align Credit Unions with Accounting Standards
On July 20, 2022, the NCUA issued an Accounting Alert, superseding the alert that was issued on March 9 of the same year. This new alert states that all federal credit unions may now adopt CECL based on their audited financial reporting year if this is different from its fiscal year.
-
State Pass-through Entity Tax Election – Should Your S Corporation Bank Make the Election?
With Ohio being the latest state to pass legislation allowing a pass-through entity tax (PTET) election in June 2022, nearly 30 states now allow S corporations and partnerships (pass-through entity or PTE) to be assessed an elective entity-level tax. This workaround is in response to the Tax Cuts and Jobs Act (TCJA) limiting the state and local tax (SALT) deduction for individuals who itemize to $10,000 through tax year 2025. Is it beneficial for your S corporation bank to make the PTET election?
-
What You Should Know About the FTC Updates to the GLBA Standards for Safeguarding Customer Information Rule
Amendments to the Standards for Safeguarding Customer Information incorporate five key compliance changes for financial institutions. The new Rule provides additional detail to existing information security program criteria, increases accountability for program reporting, expands upon the definition of a financial institution, incorporates additional terminology definitions, and offers an exemption for smaller institutions.