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In banking, the Allowance for Loan and Lease Losses (ALLL), formerly known as the reserve for bad debts, is a calculated reserve that financial institutions establish in relation to the estimated credit risk within the institution’s assets. This credit risk represents the charge-offs that will most likely be realized against an institution’s operating income as of the financial statement end date. This reserve reduces the book value of the institution’s loans and leases to the amount that the institution reasonably expects to collect. The higher the estimated risk of uncollectable assets in the portfolio, the larger the ALLL reserve should be. The allowance is a topic of much regulatory scrutiny, and a review of the ALLL methodology is a significant portion of a financial institution’s safety and soundness exam because it is important for federal bank examiners to ensure that an institution has a sufficient amount of capital in the allowance reserve. The allowance is also significant to bank management and directors as it has a large impact on an institution’s earnings and capital. An important regulatory statement describing the ALLL is the 2006 Interagency Policy Statement, jointly issued by the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA) and the Office of Thrift Supervision (OTS). In this statement, the regulators label the ALLL as one of the most significant estimates in an institution's financial statements and regulatory reports, and they advise: :“Because of its significance, each institution has a responsibility for developing, maintaining, and documenting a comprehensive, systematic, and consistently applied process for determining the amounts of the ALLL and the provision for loan and lease losses (PLLL). To fulfill this responsibility, each institution should ensure controls are in place to consistently determine the ALLL in accordance with GAAP, the institution’s stated policies and procedures, management’s best judgment and relevant supervisory guidance.” ==Frequency of review== The allowance for loan and lease losses is calculated by a financial institution at the end of each quarter or more often if it is justified by the institution’s loan review process or an analysis of loan performance. 抄文引用元・出典: フリー百科事典『 ウィキペディア（Wikipedia）』 ■ウィキペディアで「Allowance for Loan and Lease Losses (ALLL)」の詳細全文を読む スポンサード リンク
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