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Financial Instruments Proposal Concerns NCBA Members

As external auditors for the North Carolina Bankers Association (“NCBA”), Cherry Bekaert’s Financial Services Group responded to the Reference 2012-260: Financial Instruments – Credit Losses proposal on May 7, 2014. Submitted by the NCBA on behalf of its membership, the letter expresses concern over the proposed accounting standard from several perspectives. The Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board proposals are not converged standards, which result in different accounting models. The proposed standard appears to be a departure from the FASB’s conceptual framework for assets reported at amortized cost. There are also concerns around the complexity of implementation, as well as the reliability of financial reporting that may result of the proposed accounting standard.

Cherry Bekaert writes, “…the proposed accounting standard on credit losses potentially has the impact of impairing comparability between companies that follow U.S. GAAP, given the complexity and added subjectivity outlined in the proposed standard to estimate life of loan losses from the origination date of the loan.”

To read more about the letter issued by the NCBA, click here. To talk with Cherry Bekaert’s Financial Services Group about this letter or the potential impacts of the standard update, please contact Cid Hickman, Financial Services Group Industry Leader at chickman@cbh.com or Todd Batchelor, Partner in the Financial Services Group at tbatchlor@cbh.com.

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