LONDON — The International Accounting Standards Board has agreed to reconsider the application of its International Financial Reporting Standards to credit unions, based on a comment letter submitted earlier this year by World Council of Credit Unions. The letter was among just a handful of submissions IASB chose to address out of 100 questions it received for the Sept. 10 Webcast.
According to the letter, sent April 4 by Dave Grace, WOCCU's vice president of association services, certain provisions in the IASB-proposed accounting standards for small and medium-sized enterprises (SMEs) could be detrimental to credit unions.
"IASB's reconsideration of its standards is rare as a rulemaking body," Grace said. "We consider the move a strong vote of confidence in the global credit union movement."
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WOCCU's greatest concerns, according to Grace, were the draft's failure to clearly identify to whom the standards apply and to sufficiently simplify reporting requirements for smaller institutions.
The draft details the rule's application to entities that hold public assets "for a broad group of outsiders such as a bank, insurance entity, securities broker/dealer, pension fund, mutual fund or investment banking entity." Failure to include credit unions in that list, WOCCU said, may imply inclusion in full International Financial Reporting Standards, which could create hurdles.
"Excluding credit unions from the scope of the SME standards and requiring adherence to the full International Financial Reporting Standards is both impractical and counter to the IASB's intention of making accounting requirements more accessible to smaller nonlisted institutions," Grace said in his letter to IASB Board Member Thomas E. Jones.
IASB's current position is that credit unions take public deposits, and therefore, members should be given access to full International Financial Reporting Standards, as opposed to the simplified SME standards. Nonetheless, IASB agreed during the Webcast to reconsider whether or not credit unions would fit within the scope of those who use the SME reporting standards.
IASB is expected to respond to WOCCU's recommendation by the end of the year. WOCCU will be working with its member organizations and other interested parties to mobilize support for IASB's reconsideration of its standards.
To view the full text of WOCCU's letter, visit www.woccu.org/memberserv/advocacy/positionpapers.
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