PHOENIX — Estimating an appropriate allowance for loan and lease losses an NCUA examiner will accept and trying to anticipate FASB rules is a "never ending cat and mouse game where you're always trying to chase the right answer," CPA Bart Ferrin said during a breakout session on the topic at the CUNA CFO Council Conference May 20. Ferrin is the principal at Ferrin & Company, a Salt Lake City-based CPA firm that serves credit unions.
To prepare for an exam, Ferrin said CFOs should refer to FASB guidance and an NCUA accounting bulletin from 2006, "Interagency Policy Statement on Allowance for Loan and Lease Losses".
That document, Ferrin said, states that an ALLL estimate should be based on comprehensive, well-documented and consistently applied analysis of the loan portfolio and should take into account all available information existing as of the financial statement date, including environmental factors like economic, industry, geographical and political factors.
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