The board of directors is responsible for ensuring that its bank
has an appropriate Allowance for Loan and Lease Losses (ALLL) in accordance with the
institution's stated policies and procedures, generally accepted accounting principles (GAAP)
and ALLL supervisory guidance issued by banking supervisors. Management, under board oversight,
has the job of developing and maintaining the necessary policies, procedures and controls to
determine an appropriate ALLL.
Now that you've heard Mike's recommendation (in Join the Meeting) and taken a close look at the ALLL
report (in Review the Reports), will you vote for the additional $15,000? After you've made your
decision, watch the next video clip to see how the rest of the board members felt about Mike's
recommendation.
Lesson Objectives
After you complete this lesson, you should be able to:
Recognize the responsibilities of the board of directors in setting the ALLL policy.
Define an appropriate ALLL.
Identify appropriate ALLL methodologies and documentation standards.
