Does anyone have audit procedures for the Allowance for Loan Loss account that they would be willing to share? First time doing an audit of this account, any help would be great. Thanks.

depends if you are a hawkeye fan or a jayhawk fan?

Well, those are both bad, but I was not going to help on the assumption that it was an Andre Dawson fan.

You really have to be a fan to know that that is/was Andre's nickname. Of course, I didn't even think of professional sports. I doubt anyone would admit to being an atlanta hawk fan, and since hawkfan is maintaining his/her silence, I'm going to assume he is a member of the hawkeye nation.

I'm not sure I can help with the original question, though, as I try to modify audit programs baseed on known weaknesses or risks.

I really don't know that an audit of "the account" is what is needed - generally, you would review the allowance for adequacy through a review of credit quality.

I agree with -5-, in that an audit is really not necessary. A review of your historical product lines and the chargeoff rates compared to your current committment levels and your current ALLL levels would be sufficient. Also there is some guidance by the FDIC regarding ALLL levels that may help. You can just got to the fdic website and search "ALLL" and it should bring it up.

Go Badgers!

Make sure that your bank is following FASB 114 in determining your allowance especially on any classified loans. We use FASB 114 for any classified loans to determine the allowance for that loan and use historical loss rates on non-classified loans and the examiners have been very satisfied with that as well as our outside accounting firm that does our audit.

You really do need an audit of the process and adequacy. Are all loans properly accounted for? Are the balances correct? Are assumptions valid and supported? Are adjustments valid and supported? Is the bank complying with FAS 114 and FAS 5? Do the totals for each pass and the crit/classified categories balance with the bank's books? Are individual specific reserves used when appropriate?

Review your regulators guidance on the ALLL and make sure the bank is complying with that guidance.

No silence here, I was just out of the office. I am a definite Iowa Hawkeye fan. Thank you all for your advice. I agree that more of a review of the process is needed rather than an audit. I am still new to auditing and somewhat to banking, so just learning here. Thanks again.

Just wanted to pipe in....my username is Hawksfan and I'm a big Iowa Hawkeyes fan too!

There is an SEC staff accounting bulletin (I believe it is SAB 102) that may be helpful. The SAB addresses what should be included in ALLL calculations. Although the opinions of the regulators and the SEC and accounting authorities differ like night and day, there is still good information in this SAB even if you're not a publicly filing company

Hawk: I have some audit steps that are based on Wooshie and KB's suggested guidance. PM me your contact info and I'll zip you a copy of what I have. I'll let you know our size/reg/etc so you can adjust accordingly.