United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office Accounting and Information Management Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1994-10-31 monographic deposited born digital 86 p. GA 1.13:AIMD-95-8 https://www.govinfo.gov/app/details/GAOREPORTS-AIMD-95-8 P0b002ee180387ccd f:ai95008 DGPO 2010-08-12 2011-03-23 GAOREPORTS-AIMD-95-8 machine generated eng fdlp REPORT GAOREPORTS-AIMD-95-8 AIMD-95-8 Bank management Accounting procedures Insured commercial banks Banking regulation Reporting requirements Risk management Lending institutions Loan defaults Losses Bank reserves Chapter Report AIMD Loan loss reserves are major indicator of a depository institution's loss exposure from problem loans and are critical to understanding the entity's financial condition. From 1980 to 1992, about 2,700 federally insured institutions failed, at a substantial cost to taxpayers and the insurance funds. Loan losses were the major cause of many of these failures. Past GAO reports have shown that institutions have made inadequate estimates of loan losses prior to failure and that regulatory examiners have lacked a consistent framework to quantify loan portfolio risks and assess reserve adequacy. This report presents the results of GAO's review of the methods used by federally insured depository institutions to establish loss reserves for loans that are likely to be uncollectible. Neither authoritative accounting standards nor regulatory guidance provide sufficiently detailed direction to depository institutions for establishment of loan loss reserves. As a result, institutions used widely diverse methods that produced reserves that could not be meaningfully compared among such institutions and may not have reflected the true loss exposure in the institutions' loan portfolios. https://www.govinfo.gov/content/pkg/GAOREPORTS-AIMD-95-8/html/GAOREPORTS-AIMD-95-8.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-AIMD-95-8/pdf/GAOREPORTS-AIMD-95-8.pdf GAO/AIMD-95-8 https://www.govinfo.gov/app/details/GAOREPORTS-AIMD-95-8 Chapter Report GAO/AIMD-95-8; Depository Institutions: Divergent Loan Loss Methods Undermine Usefulness of Financial Reports; Bank management Accounting procedures Insured commercial banks Banking regulation Reporting requirements Risk management Lending institutions Loan defaults Losses Bank reserves