What it is
The current expected credit loss model measures the allowance over the contractual life of each asset, using historical experience, current conditions and a reasonable and supportable forecast. A methodology memo is the document that explains each choice and ties the allowance to the ledger.
The template covers scope, risk-based pools, the estimation method, the historical period, the forecast and reversion approach, qualitative adjustments, the allowance table and the governance controls. All rates and periods are blanks for the entity’s own data.
When to use it
- At adoption, and again whenever the pools, the model or the forecast approach changes.
- Each year-end, to support the allowance for trade receivables, loans or held-to-maturity securities.
- To give the auditor the documented methodology behind a significant estimate.
What’s inside
- Scope, exclusions and off-balance-sheet exposures
- Pool definitions by shared risk characteristics, plus individually evaluated assets
- Method, historical period, data tie-out and recovery treatment
- Forecast horizon, reversion method and sensitivity
- Qualitative factor table, allowance tie-out, entries, and governance controls
Standard cited
This template follows ASC 326-20. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
What goes in a pool?
Assets that share similar risk characteristics, such as customer type, industry, credit quality, age, term or collateral. An asset that does not share characteristics with the pool is evaluated individually.
How far must the forecast go?
As far as the entity can make reasonable and supportable forecasts. Beyond that horizon the entity reverts to historical loss information. The memo records the horizon, the reversion method and the period of reversion.
Does CECL apply to trade receivables?
Yes. Trade receivables, contract assets, loans, held-to-maturity debt securities and net investments in leases are in scope. Entities often use a loss-rate or aging method for short-term trade receivables.
Are qualitative adjustments required?
The entity adjusts historical information for current conditions and forecasts where they differ from the conditions in the historical period. The memo ties each adjustment to evidence and applies it consistently.
Related templates
- Accounts Receivable Aging and Allowance Workpaper
- Disclosure Checklist: Credit Losses (ASC 326)
- ASC 326 CECL Loss-Rate and Aging Workbook
- GAAP Disclosure Checklist (Private Company, Short Form)
Last updated 11/05/2026. All free templates.