What it is
The allowance for credit losses is the largest estimate on a bank or credit union balance sheet. It is built from pools of loans with similar risk, each with a historical loss rate and adjustments, plus loans evaluated individually, such as collateral-dependent loans. This workbook lays that build out so the auditor can recompute it and see what drives it.
Enter the pool balances, the individually evaluated loans and the rates. The workbook moves individually evaluated balances out of the pools, calculates the collective and individual allowance, compares the required amount with the recorded allowance, proves the provision, ties the pools to the loan ledger and checks the reserve for unfunded commitments.
When to use it
- At each period end, to recompute management’s allowance and compare it with the recorded amount.
- When the method, the loss data or the forecast changes and the effect needs to be quantified.
- To support the provision, the rollforward and the disclosures with one calculation.
What’s inside
- Individual tab: 15 loans with collateral or cash flow basis and required allowance
- Pools tab: gross balance, individually evaluated balance removed, rates and collective allowance
- ACL tab: required versus recorded, provision proof, net charge-off rate and ledger tie
- Unfunded commitment reserve calculation with a comparison to the recorded liability
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
Does the workbook choose the CECL method?
No. The method, the loss data, the forecast and the adjustments are the entity’s judgments. The workbook calculates from the rates you enter and makes the result easy to recompute, challenge and compare with the recorded allowance.
Why are individually evaluated loans removed from the pools?
A loan that does not share risk characteristics with the pool is measured separately. Leaving it in the pool would reserve it twice. The Pools tab subtracts the balances entered on the Individual tab by pool name.
Where does the reserve for unfunded commitments go?
It is a liability, not part of the allowance on loans, and it has its own expected-loss estimate. Section D calculates it from the commitments, the share expected to fund and the loss rate.
Related templates
- Audit Program: Bank Loans and Allowance for Credit Losses
- Bank Loan File Review and Risk Rating Test
- Accounts Receivable Aging and Allowance Workpaper
- Analytical Procedures Expectation Workpaper (AU-C 520)
Last updated 11/05/2026. All free templates.