Iowa Admin. Code r. 189-18.6 - Accounting treatment
(1) The
allowance for loan and lease losses account shall be charged with the amount of
the uncollectible loans which have been authorized for charge-off by the board
of directors or as directed by the superintendent . Likewise, recoveries on
loans charged off shall be credited to this account .
(2) Routine periodic adjustments to the
allowance for loan and lease losses account , accomplished during an accounting
or dividend period within the current fiscal year, shall be made by a charge to
the provision for loan and lease losses account .
(3) Prior period adjustments to the allowance
for loan and lease losses account , within the current fiscal year, may be
permitted only in relation to the correction of an error in a prior period
financial statement. These corrections shall be accounted for and reported in
the same manner as routine periodic adjustments, and shall be charged to the
current period expenses through the provision for loan and lease
losses .
(4) Prior period
adjustments to the allowance for loan and lease losses account , outside of the
current fiscal year, may be permitted only in relation to the correction of an
error in the previous fiscal year financial statement. These corrections shall
be accounted for and reported as a charge to the undivided earnings account . If
the result of this correction would create a deficit balance in the undivided
earnings account , the deficiency so created may be transferred to other
segregations of undivided earnings or to the legal reserve account , subject to
the prior approval of the superintendent .
(5) If a deficit is created in the legal
reserve account , through the establishment or maintenance of the allowance for
loan and lease losses account , the deficit shall be transferred first to
undivided earnings and, if this shall cause a deficit in undivided earnings,
then to other segregations of undivided earnings that may exist, exclusive of
the special reserve account should it be required by the
superintendent .
(6) The
superintendent may waive, in whole or in part, the requirement for the
maintenance of the allowance for loan and lease losses account which is in
excess of the statutory reserve requirements of Iowa Code chapter 533 but is
required under this chapter Such waiver shall be as a result of written
application from the directors of a credit union and shall set forth their
justification for the requested waiver
Notes
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