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ALLL / Auditors


Auditors

  • Board

    CFO Corner — “ALLL” about CECL

    In this occasional feature, CFOs from financial institutions share their approaches to the ALLL and to the CECL transition, as well as advice for keeping the board informed about related matters. Here, Ronald S. Ohsberg, Senior Executive Vice President, Chief Financial Officer and Treasurer of The Washington Trust Company shares advice from his institution.

  • Auditors

    Auditors vs. Examiners

    The mixed interest comes into play when we consider that institutions can release reserves directly into income. Auditors of banks may wish to see high profitability to appease shareholders, whereas examiners may wish to see a more conservative view of the institution’s ALLL.

  • Documentation

    Presenting to Auditors

    Similar to presenting ALLL results to examiners, documentation is of the utmost importance in defending your ALLL methodology to auditors. Because the role of an auditor includes protecting shareholders, you must be able to transparently explain your methodology at the time of an audit and provide the proper documentation to ensure that your ALLL calculation is both objective and in line with guidance.

Poll

What type of data do you anticipate leveraging for your CECL calculation?

  • 1-5 years of detailed loan level data
  • 5+ years of detailed loan level data
  • 1-5 years of aggregate (pool level) data
  • 5+ years of aggregate (pool level) data
  • I don't know the difference

Tip Of The Day

Examine the size/granularity of your FAS 5 segmentation. Are you granular enough to capture the inherent risk associated with each homogeneous pool? Are you too granular to where you lose statistical significance?

Incurred Loss

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  • Qualitative Factors
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CECL

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