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Fifteen years after the financial crisis that led to its creation and six and a half years since the issuance of ASU 2016-13, the implementation date for current expected credit loss methodology (CECL) has finally come and gone. As with many areas of CECL, regulatory guidance explaining when model validations are warranted versus when an internal audit may be appropriate, has been infrequent and ambiguous. To make this determination more confusing, there are wide-ranging definitions of the word “validation” being used by vendors across the industry. In this article, we discuss the difference between an internal audit and a validation and provide some perspective on items to be considered when making the determination as to which is more appropriate for your institution.
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Discover how financial institutions can navigate rising cyber risks and AI challenges after the FFIEC retires its CAT tool. Compare NIST CSF 2.0, CRI Profile, and CIS Controls v8.1 to choose the right framework for resilience and compliance.
The FASB introduced significant changes to the CECL standard, addressing purchased financial asset accounting and acquisition reporting. The new guidance applies to fiscal years beginning after December 15, 2026, with early adoption permitted.
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