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NCUA reiterates Flexible stance on impairment accounting
WASHINGTON (4/2/09)—The National Credit Union Administration (NCUA) intends to issue an accounting bulletin stating the agency will be flexible about when a credit union books the cost of the premium being assessed to replenish the National Credit Union Share Insurance Fund (NCUSIF). In a communication provided to the Credit Union National Association (CUNA) yesterday the NCUA said it will not object if a credit unions works with its accountant and delays booking the impairment of the 1% NCUSIF deposit. The insurance costs, which include replenishing the 1% NCUSIF deposit and an insurance premium to restore the NCUSIF to 1.3%, pay for the costs to the NCUSIF associated with NCUA’s actions involving corporate credit unions. These actions include placing U.S. Central FCU and Western Corporate FCU into conservatorship March 20, providing deposit guarantees for corporate credit unions and $1 billion in capital to U.S. Central. The bulletin language will state, "The regulatory reporting guidance in Accounting Bulletin 09-2 reflects the actions the NCUA has taken which appropriately should be reported by the March 31, 2009 quarter-end. “The various proposed legislative alternatives, if granted by Congress and acted upon by the board, could help the credit union industry spread the impact of assessments to reposition the NCUSIF to cover future losses." The agency announced last week that it has drafted legislation that will allow credit unions to spread out the deposit replenishment costs. There is also pending legislation to allow NCUA to spread out insurance costs for up to five years. CUNA supports such legislative action and continues to urge that insurance costs be spread out over seven or eight years. CUNA also supports legislation to increase the agency's borrowing authority to help finance the insurance costs. The bulletin, expected this week, will provide official notice of what a senior NCUA staff member told CUNA last week (News Now March 30). Stressing the need for congressional action for the bill to become law—and the uncertainty that surrounds that process—the NCUA bulletin will state that if a credit union’s licensed practitioner is willing to provide a written opinion that allows for the delay in the recording of the expenses and indicates in their opinion it is in compliance with GAAP, NCUA examiners will not take exception absent a definitive ruling from the accounting profession to the contrary.


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