Uncertainty Abound Involving Corporate Stabilization Charge Reversal
Does passage of the Corporate Credit Union Stabilization Fund bill mean natural person credit unions can reverse the share insurance premium and impairment charges they took at year-end 2008 or first-quarter 2009 per accounting guidelines?
Financial Accounting Standards Board advisory board member and Patelco Credit Union Chief Financial Officer Scott Waite said generally accepted accounting principles allows for financial adjustments in either direction, saying the rules allow for "subsequent events" that change original loss estimates. However, he said, "You can't keep that door open forever."
Many audit firms consider year-end financials the cut-off for loss adjustments, he said, adding that the potential for loss reversals was a big part of the debate whether to record NCUSIF premiums and impairments in 2008 or 2009.
Waite said he's waiting for guidance from the NCUA and national and regional audit firm opinions before saying for sure, but said he's hopeful credit unions can reverse corporate stabilization costs regardless of when they recorded them, because that was the original intent of the legislation.
Waite anticipates the NCUA will release guidance within the next week, and said CUNA's accounting task force, which he serves on, will probably follow up with a summary for credit unions shortly thereafter.