NAFCU letter to FASB: Exposure draft to eliminate certain financial reporting requirements for DSEs

(December 20, 2013) — 

Technical Director
Financial Accounting Standards Board
401 Merritt 7
PO Box 5116
Norwalk, CT 06856-5116

RE:      File Reference No. 2013-320
Development Stage Entities (Topic 915) – Elimination of Certain Financial Reporting Requirements

Dear Sir or Madam:

On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association  that  exclusively  represents  federal  credit  unions,  I write to you regarding the Financial Accounting Standards Board’s (FASB)  exposure draft proposing to eliminate certain financial reporting requirements for development stage entities.

In general, the proposal would remove the definition of a development stage entity (DSE) from Topic 915, eliminating the distinction between DSEs and other reporting entities under U.S. GAAP. The proposal would also remove certain reporting requirements for DSEs, including: presenting inception-to-date information on their statements of income, cash flows, and shareholder equity; labeling financial statements as those of a DSE; disclosing the DSE activities in which the DSE is engaged; and disclosing the first year in which a DSE is no longer a DSE.

NAFCU believes that this proposal will significantly reduce accounting and compliance costs for credit unions that would be DSEs under current accounting guidance. NAFCU stresses that in proposing new accounting standards updates, the FASB should take into account the unique structure of credit unions as member-owned not-for-profit cooperative entities. Credit unions aim to meet their members’ needs and provide quality service, not to generate profit. Thus, every dollar they use to comply with new regulations and accounting standards is a dollar they cannot use for the greater good of their members and the communities they serve. It is therefore important that the FASB evaluate the costs and benefits of each of its proposals as it relates to credit unions. Under the proposal, new credit unions would have additional funds to devote to developing the products and services on which their communities rely and to return to their members in the form of higher interest rates on accounts.

Further, the benefits of continuing to require credit unions to comply with the additional DSE reporting requirements would be minimal. The primary reader of credit unions’ financial statements is the National Credit Union Administration (NCUA), not individual or institutional investors. The NCUA has access to the financial records of federal credit unions and engages in constant oversight of their financial condition and asset quality. The proposed accounting guidance would continue to provide sufficient information in credit unions’ financial statements regarding their financial status to the NCUA to allow it to conduct a deeper examination into particular credit unions where it deems necessary.

Accordingly, because the proposal would result in considerable cost savings and only an insignificant loss of information for the primary reader of credit unions’ financial statements, NAFCU strongly supports this proposal.

NAFCU appreciates the opportunity to provide our comments. Should you have any questions or concerns, please feel free to contact me at or (703) 842-2272.


Angela Meyster
Regulatory Affairs Counsel

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