Management must ensure that controls are in place to develop, assess, account for and obtain approvals for the policies, methodologies and allowance estimation calculations. These controls not only involve initial policies and processes, but also changes to those policies and processes. Change management is more important because institutions must disclose the changes and the effects on the allowance estimation. This whitepaper provides guidance as to what factors institutions should specifically address regarding accounting and risk management policies.
The general purpose of this series of disclosures is to provide an understanding to the users of the financial statements concerning management practices, policies and methodology over credit quality measures by class and to specifically disclose past due/delinquent loans by class.
This whitepaper provides users of the financial statements with an understanding of the new disclosure requirements concerning impaired loans. The new disclosures – which must be made at the class level – are a significant change to the standard as they involve the tracking of impaired loans typically included in the pool calculations.
Building on the Series 3 whitepaper, this document provides institutions with an overview of the new standard's mandate for nonaccrual loan disclosures. The standard calls for policies and factors for determining nonaccrual status and multiple disclosures about the balances of nonaccrual loans.
Even though the TDR modified loan portion of the standard has been postponed till later in 2011. This new requirement will cause management to add new tracking systems to enable companies to have proper disclosures.
The new Standard requires companies to use enhanced disclosures in new reporting formats by segmenting the loan portfolio. In addition, the disclosures must include detailed discussions about the policies, methodologies and credit risk assessments used to estimate the Allowance for Credit Losses. This whitepaper will clarify the new Standard's required enhanced disclosures, the new levels of disaggregation, and the effective due dates for both public and non-public entities.
Best Practices for New Allowance Disclosures, as the PCAOB Begins to Take Aim at Auditing Disclosures
Through numerous examples, we reveal the complexity financial institutions are having with the new allowance disclosures and the time, effort and energy it takes to ensure they are held in compliance with the new standards. We demonstrate and discuss best practices used and the increased audit and evaluation that will be needed under the audit standard revisions being discussed by the PCAOB.
The Accounting Standard Update 2011-02, A Creditor's Determination of Whether a Restructuring is a Troubled Debt Restructuring, calls for more and more loans to be classified as TDR's. Learn what you'll need to stay in compliance and when the new Standard will effect your organization.