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

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