LONDON—The International Accounting Standards Board (IASB) today 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 (WOCCU). The letter was among just a handful of submissions IASB chose to address out of 100 questions the board received for its 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. 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.
"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 non-listed institutions," Grace said in his letter to IASB board member Thomas E. Jones.
IASB has indicated that credit unions take public deposits, requiring that members 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'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."
Grace's April letter carefully articulated application to entities that hold 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 the list may imply inclusion in full International Financial Reporting Standards, which could create insurmountable hurdles for many SMEs.
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 letter's full text, please visit the WOCCU Website's advocacy section at www.woccu.org/memberserv/advocacy/positionpapers.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 56,000 credit unions in 101 countries serve 200 million people. Learn more about World Council's impact around the world at www.woccu.org.