Board Welcomes Revised Interagency Policy Statement on the Allowance for Loan and Lease Losses

The Public Company Accounting Oversight Board (PCAOB) welcomes the revised “Interagency Policy Statement on the Allowance for Loan and Lease Losses” (ALLL), issued today by the federal banking agencies and the National Credit Union Administration.  The statement updates existing supervisory guidance and outlines expectations for banking organizations and bank examiners related to the development and assessment of the ALLL estimate.

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

The PCAOB continues to encourage the ongoing dialogue among banking organizations, auditors, regulators, and standard setters to ensure that ALLL estimates are properly developed, supported and audited. 

The Interagency Policy Statement is available at the following web sites:

• Board of Governors of the Federal Reserve System (FederalReserve.gov)
• Federal Deposit Insurance Corporation (www.FDIC.gov)
• Office of Thrift Supervision (OTS.gov)
• Office of the Comptroller of the Currency (www.OCC.gov)
• National Credit Union Administration (NCUA.gov)