ASC 310-10-35 (FAS 114)
Institutions should begin to gather the necessary documentation, both internal and external, before commencement of the ALLL calculation. Many sources of information, such as appraisal values or cash flow schedules, may require updating prior to the time of the calculation. As such, institutions should be mindful of documentation requirements as they begin to plan for their ALLL calculation.
ASC 450-20 (FAS 5)
Before accounting for expected credit losses, institutions must first determine which loans belong in FAS 5 (ASC 450-20) status and which belong in FAS 114 (ASC 310-10) status. It is important that institutions are consistent with how they classify their loans, as inconsistency can drastically change the end ALLL figure and draw scrutiny from regulators.