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May 14, 2013
NAFCU says FASB proposal too burdensome
May 15, 2013 – The Financial Accounting Standards Board's exposure draft amending the accounting standards for recognition and measurement of financial assets and liabilities is too burdensome for credit unions and of little use to their members, NAFCU Regulatory Affairs Counsel Angela Meyster said in a comment letter Tuesday.
The exposure draft is intended to establish a framework for classifying financial instruments and linking their measurement of liabilities to whether an entity expects to pay the contractual cash flow associated with the liability or settle it at its fair value.
Meyster wrote, "First and foremost, NAFCU would like to highlight that the required disclosures under the proposed accounting standards update are highly burdensome for credit unions to implement . . . [and] would bring little to no utility to credit union members; the entity primarily interested in credit unions' financial statements is the NCUA."
However, Meyster wrote that, if the FASB includes credit unions under the proposed framework, NAFCU would like clarification for its members as to whether an asset or liability requires amortized cost measurement, especially in the case of hold-to-maturity loans. NAFCU urged the FASB to ensure that hold-to-maturity loans are accounted for using the amortized cost method, because it provides the most accuracy and transparency.
Meyster stated that in issuing exposure drafts, "FASB should take into account the unique structure of credit unions as member-owned not-for-profit cooperative entities."
The exposure draft is intended to establish a framework for classifying financial instruments and linking their measurement of liabilities to whether an entity expects to pay the contractual cash flow associated with the liability or settle it at its fair value.
Meyster wrote, "First and foremost, NAFCU would like to highlight that the required disclosures under the proposed accounting standards update are highly burdensome for credit unions to implement . . . [and] would bring little to no utility to credit union members; the entity primarily interested in credit unions' financial statements is the NCUA."
However, Meyster wrote that, if the FASB includes credit unions under the proposed framework, NAFCU would like clarification for its members as to whether an asset or liability requires amortized cost measurement, especially in the case of hold-to-maturity loans. NAFCU urged the FASB to ensure that hold-to-maturity loans are accounted for using the amortized cost method, because it provides the most accuracy and transparency.
Meyster stated that in issuing exposure drafts, "FASB should take into account the unique structure of credit unions as member-owned not-for-profit cooperative entities."
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