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What's the benefit of FASB's proposed new accounting standard?
The financial services industry is under attackdriven by the desire for "transparency." For about two years, credit unions have diverted resources to react to outside pressures for transparency, leaving little time to focus on our future. With the new financial reform law, who knows what the future will bring?
For example, the Financial Accounting Standards Board (FASB) issued a proposed change to the method of accounting for financial instruments, aimed at transparency for investors and users of financial statements. Among the many facets of this proposal, the biggest change requires credit unions to record both loans and deposits on their balance sheets at fair value.
FASB's proposed standard describes in detail the methods for determining fair value. This new accounting treatment is essentially the same as accounting for loans and deposits in a merger. Also included in the proposal is a shift in recognition of credit impairment on loans. With more intense evaluation of credit...