FASB Delays Merger Proposal Implementation

NORWALK, Conn.-The Financial Accounting Standards Board set a 120-day comment period on its anticipated business combinations proposal and delayed the effective date one year, giving credit unions a little reprieve to get legislation through to amend the definition of `net worth.’ At FASB’s April 27 meeting, the board decided to push the target effective date to fiscal years starting on or after December 15, 2006. CUNA Associate General Counsel Mary Dunn said the association is working with FASB to ensure their accounting changes are not implemented before Congress has a chance to pass H.R. 1042, the Net Worth Amendment for Credit Unions Act, which changes the definition of net worth in the Federal Credit Union Act. The legislation would permit credit unions to count the merging institutions net worth with the continuing credit union for purposes of Prompt Corrective Action; without the change, mergers could be seriously impacted because the healthy acquiring credit union would likely fall into problems with PCA. The `exposure draft,’ or proposal is still expected out in the second quarter of this year with a final statement coming mid-way through next year. FASB said it plans to hold public roundtables to discuss the proposed statement, likely near the end of the comment period. H.R. 1042 is expected to move through Congress on the suspension calendar, typically for non-controversial legislation, in the next couple of weeks, according to NAFCU Director of Legislative Affairs Brad Thaler.