MADISON, Wis. - Certain provisions in the International Accounting Standards Board’s (IASB) proposed accounting standards for small and medium-sized enterprises (SMEs) could be detrimental to credit unions, according to WOCCU. The trade association made its position known to IASB officials in a letter written by Dave Grace, VP- association services.
WOCCU’s greatest concerns, according to Grace, focus on the draft’s failure to clearly identify to whom the standards apply and their failure to sufficiently simplify reporting requirements for smaller institutions. “Excluding credit unions from the scope of the SME standards and requiring adherence to the full International Financial Reporting Standards is both impractical and counter to the IASB’s intention of making accounting requirements more accessible to smaller non-listed institutions,“ Grace said in his letter to IASB board member Thomas E. Jones.
A second area of concern is IASB’s required use of “fair-value accounting“ methods and its usage in credit union mergers. The intent of a credit union merger is not an attempt “to bid up or receive any price beyond book value of its outstanding ownership shares,” Grace told IASB.
The way mergers are accounted for on the newly combined entity’s financial statement could be misleading and negatively impact the credit union’s capital-to-asset ratios in some jurisdictions.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
