WASHINGTON (9/20/13)--A proposed definition from the Financial Accounting Standards Board (FASB) of "public business entity" (PBE) should be adopted, the Credit Union National Association's Deputy General Counsel Mary Dunn said in a letter filed with FASB yesterday.
The letter strongly commends FASB's efforts to consider whether some differences in generally accepted accounting principles (GAAP) should be allowed for private companies, such as credit unions, that don't meet the definition of a PBE. A PBE is an entity that is regulated by the Securities and Exchange Commission, has securities that are unrestricted, and is required to produce GAAP compliant financial statements; or meets other criteria generally in connection with the issuance of securities, which do not apply to credit unions.
The CUNA letter notes that FASB is developing a guide for private companies that could result in accounting and reporting requirements for credit unions that are more reflective of their purpose, democratic control and structure than some current requirements are.
"Credit unions are not driven by the motivation to reward stockholders, but to serve the needs of their members with attractive rates and services and should not be subject to the same requirements that apply to publicly traded companies," the letter notes. The proposed PBE definition "will be of critical importance in determining which institutions are covered by the guide and thus eligible for alternatives that still qualify as GAAP," Dunn wrote. Other types of financial institutions and organizations that do not meet the PBE definition could also be eligible for any GAAP alternatives FASB develops that apply to them.
"Allowing accounting principles and requirements to vary on a reasonable basis, depending on the type of entity, will result in standards that are more precisely tailored to the needs of stakeholders of differing organizations and produce financial reporting that is more transparent and accurate," CUNA emphasized. CUNA also urged FASB to coordinate with prudential regulators in the development of alternative GAAP standards "to ensure regulators will accept their use" when alternative principles are adopted by FASB.
CUNA will continue to weigh in with FASB on the development of alternative GAAP standards and how credit unions could be affected by the use of such alternatives. CUNA's letter was developed with the CUNA Accounting Subcommittee and CUNA CFO Council members.
Use the resource link to access this and all recent CUNA Comment Letters.