I began my career auditing and consulting with credit unions in 1977 and vividly recall my mentor, Gene O’Rourke, teaching me allowance for loan losses (ALL) theory in those early days. Credit unions had adopted ALL accounting procedures a few years earlier and were still steep in the learning curve for this important accounting concept. Before adoption of the ALL, credit unions simply charged-off uncollectible loans directly to the regular reserve, with no impact to earnings.
