LONDON (3/5/14)--The World Council of Credit Unions (World Council) in a comment letter filed this week backed amendments proposed by the International Accounting Standards Board (IASB) that would give credit unions increased ability to follow International Financial Reporting Standards for small- and medium-sized entities (IFRS for SMEs).
The World Council, however, recommended that the IASB go further and exclude credit unions and other non-publicly traded financial institutions from the definition of "publicly accountable" in order to make the IFRS for SMEs standard more consistent with U.S. Generally Accepted Accounting Principles (U.S. GAAP).
IASB sets International Financial Reporting Standards (IFRS), which apply to credit unions in a growing number of jurisdictions including Australia, Brazil, and Canada. IASB and the U.S. Financial Accounting Standards Board are in the process of converging IFRS with U.S. GAAP, thereby bringing U.S. credit unions under accounting rules that are the same as IFRS in most respects.
The exclusion of credit unions from the definition of "publicly accountable," recommended by the World Council, would align the IASB rule more closely with U.S. accounting rules. In December, FASB exempted U.S. credit unions from the definition of "public business entity," thereby allowing them to follow less burdensome private company accounting standards.
In its comment letter to IASB, the World Council wrote, "We agree that some credit unions--especially smaller institutions and those in developing countries--should be able to state their financials officially in conformity with IFRS for SMEs in order to help limit excessive compliance burdens on small credit unions, as well as to reduce the use of less stringent pro forma accounting systems at financial institutions in developing countries."
The World Council's letter also supported the IASB proposed expansion of the IFRS for SMEs "undue cost or effort" exemptions as another way to reduce compliance burdens on small credit unions.
To read the complete comment letter, use the resource link below.