Centri Case Study: The Technical Expertise You Need for Adopting CECL

Challenge

A public mortgage Real Estate Investment Trust (REIT) identified that, as a smaller reporting company, they would be required to adopt new accounting guidance referred to as CECL – Current Expected Credit Losses. Although the company has a dedicated accounting department and personnel to perform functions in connection with its quarterly and annual reporting, the company acknowledged it did not possess the technical expertise in order to build a CECL model nor write a memo that analyzes the guidance.

Action

The company called on Centri to provide a model that evaluated both the historical credit losses and the estimation of credit losses based on its portfolio of loans. Furthermore, Centri was also engaged to memorialize its analysis in a position paper for its auditors in connection with its adoption during the quarter ended March 31, 2023.

Resolution

Centri assembled a team comprising members from its technical accounting and valuation solution sets. This team took a collaborative approach towards the project not only by providing management with a deliverable but also by working side by side with the company. Centri trained company personnel on the nuances of CECL, provided perspective on how Centri approached its analysis, and delivered a foundation so management would be able to maintain the model going forward for future quarters.

Results

Because of Centri’s approach to involve multiple disciplines in connection with a complex examination such as the adoption of CECL, the company received an analysis that provided a realistic depiction of its credit losses based on the CECL model and disclosures to be included within its financial statements, on Form 10-Q, which was filed timely.  Whenever a new accounting standard requires adoption, Centri takes great care to analyze, interpret, and evaluate so that the implementation is performed correctly and properly reflected in a company’s financial statements the first time.

Gerald Cullins

Partner | Valuation Practice Leader

Jerry is a Partner at Centri Business Consulting and the leader of the firm’s Valuation Practice. He has more than 20 years of valuation experience and has analyzed and valued companies for numerous purposes, participating in a...

Blake Roberts

Partner | Technical Accounting Practice Leader | CPA

Blake is a Partner at Centri Business Consulting and the leader of the firm’s Technical Accounting Practice. He has more than 18 years of public accounting experience. Throughout his career, Blake has worked with public,...

Michael Mastruzzo

Managing Director | Real Estate Practice Leader | CPA

Michael is a Managing Director at Centri Business Consulting and the leader of the firm’s Real Estate Practice. He joined Centri in June 2022 and assists in practice development across the firm’s service lines. Throughout...

About Centri Business Consulting, LLC

Centri Business Consulting provides the highest quality advisory consulting services to its clients by being reliable and responsive to their needs. Centri provides companies with the expertise they need to meet their reporting demands. Centri specializes in financial reportinginternal controlstechnical accounting researchvaluationmergers & acquisitions, and tax, CFO and HR advisory services for companies of various sizes and industries. From complex technical accounting transactions to monthly financial reporting, our professionals can offer any organization the specialized expertise and multilayered skillsets to ensure the project is completed timely and accurately.

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