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100 Introduction PDF

The document introduces revisions to the Accounting Manual for Federal Credit Unions due to statutory changes requiring credit unions over $10 million in assets to follow GAAP. It outlines the purpose and use of the manual, which provides comprehensive accounting guidelines and requirements for credit unions under $10 million in assets to follow regulatory-basis accounting. It also describes how credit union operations are governed by relevant laws, bylaws and regulations, and the purpose of accounting principles and standards to provide full and fair financial disclosure.

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Gere Tassew
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129 views3 pages

100 Introduction PDF

The document introduces revisions to the Accounting Manual for Federal Credit Unions due to statutory changes requiring credit unions over $10 million in assets to follow GAAP. It outlines the purpose and use of the manual, which provides comprehensive accounting guidelines and requirements for credit unions under $10 million in assets to follow regulatory-basis accounting. It also describes how credit union operations are governed by relevant laws, bylaws and regulations, and the purpose of accounting principles and standards to provide full and fair financial disclosure.

Uploaded by

Gere Tassew
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Introduction and General Instructions Section No.

100

Page No.
ACCOUNTING MANUAL FOR FEDERAL CREDIT
UNIONS 1
NEW REVISED EDITION 1
PURPOSE AND USE AS A PRESCRIBED SYSTEM 1
LOOSE-LEAF SYSTEM - PERIODIC REVISIONS 2
ELIMINATION OF THE RECOMMENDED CREDIT
UNION CHART OF ACCOUNTS 2
CREDIT UNION OPERATIONS GOVERNED BY
LAWS, BYLAWS AND REGULATIONS 2
ACCOUNTING PRINCIPLES AND STANDARDS --
PURPOSE AND SCOPE 2

ACCOUNTING MANUAL FOR FEDERAL


CREDIT UNIONS As a result of the statutory change and the imple-
menting rule, credit unions under $10 million in
NEW REVISED EDITION assets are provided this Manual as a guide in
accounting for financial transactions and re-
A recent change in the statute governing credit un- porting in accordance with the regulatory-basis
ion financial reporting has necessitated and of accounting prescribed herein. Of course these
hastened this revision to the existing Accounting credit unions also have the option of following
Manual for Federal Credit Unions. generally accepted accounting principles (GAAP).

Section 201(a) of the Credit Union Membership Credit unions with $10 million or more in assets
Access Act (CUMAA), Public Law 105-219, 112 should seek the advice of an independent ac-
Stat. 918 (1998), added a new subsection to section countant to gain a full understanding of GAAP.
202(a)(6) of the Federal Credit Union Act (FCUA),
12 U.S.C. 1782(a)(6)(C). Subsection (C) address- PURPOSE AND USE AS A PRESCRIBED
es accounting principles, generally requiring credit SYSTEM
unions having assets of $10 million or more to fol-
low generally accepted accounting principles This manual sets forth comprehensive procedures
(GAAP) in all reports or statements filed with the for the maintenance of accounting records by fed-
NCUA Board.\1\ 12 U.S.C. 1782(a)(6)(C). The eral credit unions with under $10 million in assets.
NCUA Board, and State credit union supervisors It also contains accounting guidelines and require-
under applicable statutes, are given the authority to ments for accounting topics of interest such as
require credit unions having less than $10 million investments in credit union service organizations,
in assets to follow GAAP. 12 U.S.C. interest method of amortization, securities, repos-
1782(a)(6)(C)(iii). sessed property, share drafts, credit cards, etc.

In the Federal Register: July 29, 1999 (Volume 64, This Manual is not incorporated by reference in the
Number 145), the NCUA Board published a final NCUA Rules & Regulations (R&Rs). However,
rule revising §741.6 implementing the statutory adherence to the accounting principles and stand-
mandate that Call Reports filed by credit unions ards in Section 200 of this Manual will ensure
having assets of $10 million or more must be con- compliance with the full and fair disclosure re-
sistent with GAAP. 12 U.S.C. 1782(a)(6)(C)(i). quirements of the R&Rs which:

Accounting Manual for Federal Credit Unions December 2002


Page 1
Section 100 Introduction

• Define the required level of disclosure needed familiar Accounting Manual chart of accounts is
on financial statements; being eliminated in favor of a charting system of
the credit union’s own design which best facilitates
• Require federal credit unions to select an ac- its compliance with the current and existing call
counting basis that is described in this Manual; reporting requirements.
and
• Instructs credit unions to prepare financial CREDIT UNION OPERATIONS
statements in the manner prescribed in this GOVERNED BY LAWS, BYLAWS AND
Manual or its equivalent financial statements. REGULATIONS

The remainder of the Manual is intended to provide Federal credit unions are corporations organized
guidelines to credit union officials and employees and operated under the provisions of the Federal
with information on recommended procedures and Credit Union Act (Act). They are corporations
practices. with powers limited to those granted by their char-
ter and the Act. They are governed by their bylaws
For the most part, the manual adheres to generally and the regulations issued by the National Credit
accepted accounting principles (GAAP) except for Union Administration (NCUA). All directors, of-
certain permissible accounting practices which are ficers, and committee members should have a
less stringent GAAP. general knowledge of these laws, bylaws, and regu-
lations, and a specific knowledge of the duties
The manual may be adopted by federally insured, required of the particular office held.
state chartered credit unions under $10 million in
assets at the option of the credit unions and their ACCOUNTING PRINCIPLES AND
state supervisor. STANDARDS -- PURPOSE AND SCOPE

LOOSE-LEAF SYSTEM - PERIODIC Accounting by federal credit unions serves many


REVISIONS internal and external purposes. Comprehensive and
accurate financial information is essential so that
The manual is designed as a loose-leaf system to credit union management can make sound deci-
facilitate updating. When revisions become neces- sions concerning the operation of the credit union.
sary, revised pages will be issued, accompanied by Management must also account for its actions to
appropriate explanations and instructions for updat- members, creditors, the National Credit Union
ing your manual. Administration in its supervisory capacity, and oth-
ers having valid financial interests.
ELIMINATION OF THE RECOMMENDED
CREDIT UNION CHART OF ACCOUNTS Financial information provided to management is
summarized in credit union financial statements
Credit unions are required to file periodic (quarter- which are intended to present fairly the financial
ly or semi-annual) call reports with the National position of the credit union at a given date, and the
Credit Union Administration (NCUA). The credit results of its operations for a given accounting pe-
union’s accounting system and its supporting chart riod. The financial information so presented must
of accounts must facilitate reporting on the call re- be supported by accounting records maintained in
port. Consequently, it is NCUA’s contention that conformance with principles and standards de-
the call report reporting format and requirements signed to provide full and fair disclosure of all
should drive the credit union’s financial reporting material information relating to the credit union's
mechanism rather than the Accounting Manual operations.
chart of accounts, though familiar to credit unions.
Trying to keep the two NCUA systems uniform, The principles and standards of federal credit un-
compatible and current was administratively un- ions have been designed to follow practices in use
workable. Accordingly, the recommended and by other financial and lending institutions and are

December 2002 Accounting Manual for Federal Credit Unions


Page 2
Introduction Section No. 100

generally based on generally accepted accounting


principles (GAAP) as developed by the accounting
profession. Use of these principles by credit unions
for their accounting and financial reporting will
provide for full and fair disclosure of financial in-
formation.

Many of the principles and standards require the


exercise of judgment by credit union officials
where optional courses of action are available or
where estimates are required for application of a
particular principle. Also, direction is necessary
under the doctrine of materiality (See Section 200)
in order to evaluate the need for applying a particu-
lar principle to specific transactions or situations.
Subject to these qualifications, the principles and
standards in this section of the Manual must be fol-
lowed to comply with the full and fair disclosure
requirements of the Rules and Regulations.

Accounting Manual for Federal Credit Unions December 2002


Page 3

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