I am currently working on year end figs for a small community finance institution. This entity makes loans to small businesses, and at present needs to make a provision for loans that it believes may not be repaid. It also has within its reserves an amount of loan guarantee funding, which has been provided to underwrite the debt.
My question is, if I enter a provision for the doubtful debt, do I also need to show that this is covered by the loan guarantee?
I would be really grateful if someone who has experience of this type of situation could please point me in the right direction.