Accounting & Auditing
ICBA opposes any prohibitions on the ability of community banks to classify mortgage loans and investment securities at amortized cost when the bank’s intent is to collect contractual cash flows over the life of the investment.
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Position & Background
ICBA opposes any prohibitions on the ability of community banks to classify mortgage loans and investment securities at amortized cost when the bank’s intent is to collect contractual cash flows over the life of the investment.
ICBA supports the work of the Financial Accounting Foundation’s Private Company Council to seek recognition, measurement, and disclosure alternatives for smaller private companies including non-public community banks.
When accounting standards are developed, provisions should be made for smaller financial institutions and businesses regardless of their financial statement reporting requirements so that the cost of implementing standards does not outweigh their benefit to financial statement users.
As community banks become larger in size, FASB should not penalize their business models through more burdensome accounting policies and reporting requirements if their core business activities have not changed.
Recognition and Measurement
ICBA opposes restrictions on the ability of community banks to classify mortgage loans and investment securities at amortized cost under any proposed recognition and measurement projects.
Private Company Council
ICBA is encouraged by the work of the Financial Accounting Foundation to promote a different approach to financial accounting and reporting for private companies, including non-public community banks, by creating the Private Company Council (PCC). The PCC should set a goal of generating a separate set of accounting standards specifically tailored to nonpublic entities so that small, non-complex entities like community banks can generate meaningful financial statements without the complexity that characterizes the current financial reporting framework for for-profit entities.
Burdens of Accounting Standards
Accounting standards setters should take greater account of the potential impact of changes to accounting standards on community banks and other small businesses, be they private or public companies, which have fewer resources to cope with them. The costs of accounting changes must not outweigh their benefits. As community banks become larger, FASB should continue to be sensitive to the burden of accounting standards by not imposing more strenuous reporting requirements simply because bank size has increased.
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