Revised ALLL Policy Gets Nod From PCAOB

The Public Company Accounting Oversight Board (PCAOB) gave its blessing to the latest Policy Statement on the Allowance for Loan and Lease Losses (ALLL), issued this week.

The interagency policy statement on ALLL, developed by federal banking and credit union regulators, updates the 1993 statement and outlines expectations for banks and examiners in regards to the development and assessment of the ALLL estimate.

“The policy statement outlines enhanced guidance on the sound management practices that are expected to be employed in the development of the allowance for loan and lease losses estimate and supporting evidential matter,” PCAOB Chairman Mark Olson said.

“The policy statement is a helpful complement to existing material used by banking organizations and auditors in developing, supporting and auditing this important estimate,” Olson said.

In a statement that says that it welcomes the revision, the PCAOB said it “continues to encourage dialogue among banking organizations, auditors, regulators, and standard setters to ensure that ALLL estimates are properly developed, supported and audited."

A full text of the statement can be found at the agency websites, including http://www.occ.gov/ftp/release/2006-134b.pdf.

Here are the participating agencies:

  • National Credit Union Administration: www.ncua.gov
  • You may like these other stories...

    The Public Company Accounting Oversight Board (PCAOB) on Tuesday adopted a new auditing standard and amendments in three areas of the audit that could pose an increased risk of material misstatement in company financial...
    Read more from Larry Perry here and in the Today’s World of Audits archive.In my last article, I presented an overview of one of the first steps in the preplanning phase of an audit engagement: reviewing prior year...
    Read more from Larry Perry here and in the Today’s World of Audits archive.AU-C Section 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (SPFs),...

    Upcoming CPE Webinars

    Jul 31
    In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
    Aug 5
    This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.