KPMG and SAS form alliance to help banks prepare for CECL, IFRS 9 compliance

Issued by KPMG on July 12, 2018

KPMG LLP today announced an alliance with SAS, a leader in analytics, to help banks transition to a new accounting standard – current expected credit loss (CECL) – which will drastically change how financial institutions estimate, reserve and report on losses.

The Financial Accounting Standards Board (FASB) introduced CECL as the new standard for the recognition and measurement of credit losses for loans and debt securities in an effort to ensure better loss coverage. The new standards take effect in stages beginning January 2020.

“These changes are significant in terms of how banks will manage risk and financial data, build their analytic platforms and share information between departments,” said Troy Haines, senior vice president and head of the risk management division at SAS. “By aligning with KPMG in the United States, we are helping customers improve business performance and turn risk and compliance requirements into opportunities.” 

This change in expected credit loss reporting is not only happening in the United States; institutions with global reporting requirements must comply with similar expected credit loss practices in International Financial Reporting Standard 9 (IFRS 9).

KPMG takes a multidisciplinary approach to CECL and IFRS 9 adoption, providing services related to accounting and regulatory change as well as the broader risk management and financial data environment.

“The alliance will provide CECL and IFRS 9 offerings that combine the capabilities and resources of two market-leading providers: KPMG with enablement services including in-depth accounting, finance, tax, modeling and risk specialization, and SAS with the dedicated expected credit loss software platform,” said Ed Bayer, Risk Analytics Advisory managing director at KPMG LLP. “The alliance delivers industry-leading services and technology to help banks navigate the new guidelines.”

Leveraging its breadth of experience, KPMG can assess existing accounting policies, data availability, modelling capability and internal controls at the financial institution and design an implementation roadmap considering the requirements of the new standard.

SAS provides SAS® Expected Credit Loss, a comprehensive, market-leading solution adopted by more than 75 global financial institutions. The solution supports the CECL calculation and reporting process and bridges the data and reporting requirements necessary for both risk and finance departments.

“The strength of the SAS and KPMG alliance combines the technology and experience necessary to help customers be successful and minimize the risk associated with compliance and implementation of the new CECL and IFRS9 standards,” said Chris Webber, Research Director, Strategic Alliances and Ecosystem, IDC.

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