WASHINGTON (6/8/12)--The Financial Accounting Foundation's (FAF) recently established Private Company Council (PCC) could have important implications for credit union operations, according to the Credit Union National Association (CUNA).
The council will review existing U.S. generally accepted accounting principles (GAAP) and determine how those standards could be improved to better serve the needs of private companies. The group could then make recommendations to the Financial Accounting Standards Board (FASB), as needed.
The council will also advise FASB on how certain agenda items that FASB is considering could impact private companies.
CUNA has repeatedly emphasized that financial accounting standards for credit unions and other private companies need to be improved, and has called for the challenges that many credit unions and others face due to the complexity of existing accounting standards to be addressed.
CUNA has also called on FASB to "take the steps necessary to mitigate the burden on smaller entities, particularly when there is no or only minimal resulting benefit."
The PCC could recommend that FASB endorse changes on these and other issues once the council is up and running, CUNA Assistant General Counsel Luke Martone said. If endorsed by FASB, a proposal would then be open for public comment. Once comments have been received the PCC would then have an opportunity to seek a final decision on endorsement from FASB; if FASB endorses the changes they would then be incorporated into GAAP.
The FAF is accepting nominations for the council, which will be comprised of nine to 12 members. Financial statement users, financial statement preparers, and auditors are among those that may be nominated for a PCC post. Members will serve initial three-year terms and may be reappointed to a subsequent two-year term.
Many organizations made recommendations to the FAF as the PCC was developed, and one CUNA suggestion, requiring that the PCC chair not be a FASB member, was accepted.
CUNA is reviewing the FAF's report on the new council with its Accounting Subcommittee, and will update credit unions on future PCC actions.
For more on the council, use the resource link.