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Fair value accounting guidance not enough says CUNA
WASHINGTON (10/10/08)—The Credit Union National Association (CUNA) yesterday said proposed accounting guidance does not go far enough in addressing key issues used to determine the fair value for certain assets where there is an ability and intent to hold until recovery or maturity. CUNA voiced its concern via comment letter on the Financial Accounting Standards Board's (FASB) Proposed Staff Position FAS 157-d, which offers guidance on using FASB Statement No. 157, Fair Value Measurements, in a market that is not active. The letter was developed under the auspices of CUNA’s Accounting Task Force, led by Scott Waite, senior vice president and chief financial officer at Patelco CU in San Francisco. CUNA, in its letter authored by CUNA Deputy General Counsel Mary Dunn, said FASB’s proposed guidance “raises questions regarding how it should be applied, and we are not certain how useful it will be. We also believe that more direction should be provided for the use of risk-adjusted premiums and discounts.” CUNA pointed out that parts of the proposed guidance does not go far enough to “address the concern that many have raised that an asset that can be held to maturity should not be marked to current market prices.” CUNA also urged a one-week extension to the comment period, which FASB held open for four days--from Oct. 6-9. The Emergency Economic Stabilization Act enacted last week, among other things, authorizes the Securities and Exchange Commission to suspend the mark-to-market standards and to evaluate that application. CUNA said it believed FASB’s guidance appeared to be an effort on the part of FASB to “provide an alternative to the suspension of the FASB Statement 157.” “While we think that appropriate comprehensive guidance can be useful and may be the answer, we also believe that the SEC should still proceed with its evaluation of the fair value standards under the new Emergency Economic Stabilization Act as expeditiously as possible,” wrote CUNA. Use the resource link below to access CUNA’s complete letter.
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