Compliance Blog

NCUA just released a summary of a PriceWaterhouseCoopers report that lists recommendations for improving the corporate credit union system.  NCUA hired PWC on this matter back in November.  Access NCUA's press release here, which also gives you access to a summary of the PWC report findings.   PWC's recommendations sound pretty familiar.  For example, here's what PWC recommended to help corporate liquidity:

• NCUA should collaborate withnatural person credit unions to increase liquidity at corporates.
• NCUA should use the Central Liquidity Fund (CLF) to infuse liquidity into corporates.
• NCUA should implement a deposit guarantee program for deposits at corporates.

Interesting. 

I wonder how many other times NCUA has tapped into outside expertise to help brainstorm regulatory solutions to an industry problem.

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Yesterday, the American Institute of Certified Public Accountants (AICPA) provided guidance on how credit unions should account for the costs of NCUA's stabilization plan.  Access the AICPA guidance here.

The guidance provides for flexibility on how to treat thecosts resulting from NCUA's stabilization plan.   Technical Practice Aids are not binding, but accountants may rely on them on them in making their determinations.  In theguidance, the AICPA indicated that it will addresses three issues:

1. The accounting treatment of credit unions NCUSIF deposit,
2. How the obligation of the insurance premium should be recognized for financial reporting purposes, and
3. How corporate credit unions and natural person credit unions should evaluate their membership capital shares (MSC) and paid-in capital (PIC) in U.S. Central and in other corporate credit unions for other-than-temporary impairment (OTTI) at December 31, 2008.

On the first two matters - the NCUSIF deposit and the premium assessment – the AICPA staff has concluded that there is diversity in opinion and provided alternative views.  Importantly, the guidance does not express a preference.  The guidance, rather, provides that there is supporting literature for credit unions to amend their 2008 financial statements to reflect the deposit costs and insurance premiums, to amend the 2008 financial statements to reflect the deposit cost only as a 2008 event, or treat both the deposit insurance costs and the premium as a 2009 event and record them as such in their 2009 financial statements.

On the third issue, the AICPA guidance discusses authoritative literature on how corporates and natural persons evaluate their membership capital shares and paid-in capital and determine whether an OTTI exists.  Corporates should evaluate U.S. Central’s ability to redeem the MSC or PIC within anticipated time frames.  The audited financial statements of the U.S. Central as of and for the year ended December 31, 2008 would be useful evidence to appropriately evaluate MSC or PIC for other-than-temporary impairment.  Natural person credit unions should follow this approach in evaluating whether their investments are other than temporarily impaired.  

Again, the AICPA indicated that the guidance should be posted shortly.