What it is
The loan portfolio and the allowance for credit losses drive most of the audit risk at a bank. This program organizes the work into loan existence and accuracy, risk rating review, the allowance, nonaccrual and modifications, and deposits, interest and capital.
It is a five-tab workbook: instructions, an overview with completion counts, a risk assessment, numbered procedures with sign-off columns, and a tie-out tab. General procedures that every audit needs are appended automatically.
When to use it
- Planning and performing the audit of a bank, savings institution or bank holding company.
- Documenting the response to the significant risk in the allowance estimate.
- Training staff on the sequence of loan and allowance procedures.
What’s inside
- Loan procedures: subledger tie-out, confirmation, originations and fee deferral
- Risk rating re-grading and credit file review steps with selection guidance
- CECL steps: model inputs, forecast, qualitative adjustments and individual evaluation
- Nonaccrual, charge-off, modification and foreclosed asset tests
- Overview tab with open items, exceptions and completion by section
Standard cited
This template follows ASC 326-20 / AU-C 540. 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. See AU-C 540 explained.
Questions
Does the program set sample sizes?
No. It gives selection guidance and points to your firm’s sampling policy under AU-C 530. Set the size from tolerable misstatement, expected misstatement and assessed risk.
Which standard governs the allowance?
ASC 326-20 sets the current expected credit loss model. The audit side is AU-C 540 on estimates. Apply the versions in effect for the period.
Can I use it for a credit union?
The credit union program in this library fits the member-owned structure better, though many loan steps carry across.
Related templates
- Bank Allowance for Credit Losses Calculation (ASC 326)
- Bank Loan File Review and Risk Rating Test
- Audit Program: Credit Union
- Risk of Material Misstatement Matrix by Assertion (AU-C 315)
Last updated 11/05/2026. All free templates.