Meyster: FASB lease liability proposal complicates
Sept. 16, 2013 – NAFCU Regulatory Affairs Counsel Angela Meyster urged the Financial Accounting Standards Board to exempt credit unions from its proposal on the treatment of lease liability, noting the proposal poses cost and regulatory net worth issues.
If an exemption is not possible, she wrote in a comment letter sent Friday, FASB should implement a two-tiered effective date and work with NCUA to minimize potential unintended consequences.
The proposal would require lessees to recognize a right-of-use asset and a lease liability, and to recognize the interest on the liability and the amortization of the asset, either on a combined or separate basis. Meyster argues that this would “generally increase the costs and complexity for credit unions to account for leases compared with existing guidance.”
She added, “This proposal could result in a number of unforeseen consequences for credit unions, including causing them to fall below regulatory net worth ratio thresholds and causing them to violate their bond covenants” – which, she explains, could “prompt the NCUA to take corrective action where it is not warranted.”
Meyster recommended that credit unions be exempt from the proposal. Barring that, she encouraged FASB to implement a two-tiered effective date, and asks that the board work with NCUA to minimize potential unintended consequences.
NAFCU comment letter