WASHINGTON (10/6/10)--The Credit Union National Association (CUNA) this week was critical of the Financial Accounting Standards Board’s (FASB) proposed financial instrument accounting standards update, saying that the update would force credit unions to incur substantial direct and indirect costs to comply, while providing no benefit to credit unions, their members or their regulators. The proposal would require most financial assets and liabilities to be reported under Generally Accepted Accounting Principles (GAAP) at fair value. The proposal would also require the funding of the Allowance for Loan and Lease Loss Accounts to be under the expected loss model. Credit unions over $10 million in assets are required to comply with GAAP. While forcing financial institutions to report fair value under GAAP is “of questionable value to investors of publicly traded companies,” the information is even less useful to the members, creditors, board members, and regulators of credit unions, CUNA said. The association added that “credit unions generally fund their operations by taking deposits and holding loans for the long term,” and, as a result, “most financial instruments that credit unions hold are not readily marketable.” CUNA raised general concerns with FASB before the proposal was released. CUNA is coordinating with the National Credit Union Administration and other regulators to “ensure” that “available avenues of opposition” are employed, CUNA President/CEO Bill Cheney said. CUNA Accounting Subcommittee Chairman and Patelco CU Chief Financial Officer Scott Waite will, along with CUNA staff, participate in an Oct. 12 roundtable discussion on the proposal at FASB headquarters in Norwalk, Conn. For the full comment letter, use the resource link.