WASHINGTON (11/5/12)--Credit unions are unique in their structure and the Credit Union National Association (CUNA) asked the Financial Accounting Standards Board (FASB) to recognize the uniqueness as it develops a decision-making framework that will guide the recently created Private Company Council as it determines whether exceptions to U.S. Generally Accepted Accounting Principles--or GAAP--for credit unions and other private entities are appropriate.
CUNA generally supported FASB's proposed framework saying it includes successfully appropriate factors differentiating private companies from public companies that the PCC will examine in its assessment of whether exceptions to GAAP are necessary and appropriate.
However, CUNA took exception with FASB's approach that would require all private companies, including credit unions, that apply certain industry-specific accounting guidance to generally follow the same industry-specific guidance that public companies follow.
In its Oct. 31 comment letter, CUNA noted that credit unions—as not-for-profit, member-owned financial cooperatives—exist to serve their members not to make a profit. Unlike most other financial institutions, credit unions do not issue stock or pay dividends to outside stockholders.
"They use their earnings to build capital and work hard to provide favorable rates on loans, and savings, and to charge lower fees," reminded CUNA Assistant General Counsel Luke Martone in the letter.
"We urge FASB to consider that the credit union business model is quite different from that of publicly traded entities. The stakeholders of a credit union for information purposes are its members and its regulator, not the public or shareholders who have purchased publicly traded stock."
Use the resource link to read the complete CUNA comment.