Only 11 percent of CFOs at financial institutions under $10 billion in assets believe they are prepared for the transition to the new current expected credit loss accounting standard, according to a recent study.

The study was conducted by California-based Pacific Coast Bankers Bank, a company that sells products intended to help community banks become stronger.

“The mandatory shift from the incurred loss model to the current expected credit loss model will have a significant impact on financial institutions, and the time to start preparation is now,” Doug Hensley, senior vice president and head of consulting services at PCBB, said in a statement. “The change to CECL is going to happen, but most financial institutions don’t need a high-priced, restrictive, one-solution-fits-all software approach that is designed for the mega-banks; they need a partner who will work with them throughout the implementation and beyond. Our research has shown that some of the methodologies developed for the larger banks won’t work for smaller institutions and would be a waste of time, resources and would not accurately model expected loss.”

The Financial Accounting Standards Board issued the CECL methodology for estimating allowances for credit losses in June 2016.

The standard is effective for SEC filers in fiscal years and interim periods beginning after Dec. 15, 2019.

For public business entities that are not SEC filers, or an entity that is not a public business entity, the standard takes effect in fiscal years and interim periods beginning after Dec. 15, 2020.

Under CECL, financial institutions will be required to gauge the expected loss over the life of a loan by using historical information, current conditions and reasonable forecasts. The transition to the CECL model comes with greater data requirements and changes to accurately determine expected losses under the new methodology.