Accounting & DisclosureComplianceCOVID-19Treasury Management
June 4, 2020

Smooth Sailing: One Investment Manager’s Painless Adoption of CECL

Taking a qualitative approach and doing no discounted cash flow calculations produced a calm CECL debut for at least one investment manager.At a recent NeuGroup meeting, the only investment manager whose company adopted the new accounting standard for estimating credit losses in the first quarter described a relatively painless process, giving comfort to some of his peers. The meeting, sponsored by BlackRock, included a presentation by Aladdin on FASB’s current expected credit losses (CECL) methodology. Aladdin offers risk management software…
Accounting & DisclosureCapital Markets
May 14, 2020

Treasury’s CECL Conundrum: How to Estimate (and Define) a Credit Loss

Treasury investment managers trying to get a better handle on FASB’s new methodology for estimating credit losses got some help this month at two NeuGroup virtual meetings. No surprise, the issue of how exactly to estimate those losses generated plenty of interest.  One of the meetings featured a presentation from EY that included the slide below. It lays out three criteria used to adjust historical loss information to develop a loss estimate. EY’s presenter said that coming up with a “reasonable and…
Accounting & DisclosureCapital MarketsFXRisk Management
May 7, 2020

Crisis Forces Consideration of Unwinding Cash-Flow Hedges

The COVID-19 crisis has reduced exposures to a point where for many companies those hedges may not be needed anymore. Time to unwind? If you’re planning on unwinding a cash-flow hedge, there are many things to think about before you do. Determining when and why to unwind, as well as how to view the transaction’s cost benefits, and what counterparty to use, are just a few of the factors to consider. This was the topic of discussion among NeuGroup FX Managers’…
Accounting & DisclosureComplianceTreasury Management
January 6, 2020

CECL Important for Nonfinancial Companies, Too

Nonfinancial corporates extending credit must also prepare for CECL. Calendar year companies must apply new accounting for credit losses at the start of the year, in Q1 2020 financial statements, and that includes nonfinancial corporate creditors engaged in a variety of transactions. The Financial Accounting Standards Board’s new current expected credit losses (CECL) methodology replaces the incurred-loss method, which recognizes losses when they become probable. CECL, instead, requires lenders to recognize credit losses expected over the life of a loan…
Accounting & DisclosureUncategorized
November 29, 2019

Cloud Accounting May Require New Controls, Impact Covenants

Treasury executives whose companies are relying more and more on cloud services should confer with their accountants about new requirements that potentially could impact loan covenants as well as operational elements tangentially affecting treasury. Companies are increasingly choosing treasury management systems (TMSs) and other applications via the cloud rather than installing the software in their own data centers. The Financial Accounting Standards Board’s (FASB) new accounting standard aims make the accounting between the two approaches more similar by requiring companies…