DEAR BOARD OF DIRECTORS:
This letter concerns changes to the 1999 Call Report that we plan to implement in the near future. Normally, call report changes are effective in the first reporting cycle of the calendar year (March for credit unions with assets greater than $50 million; June for all other credit unions). However, because of the substantial nature of the changes for 1999, we decided to delay implementation until September 1999 for credit unions with assets greater than $50 million, and December 1999 for all other credit unions.
Although the changes for 1999 include a few additional data items initiated by NCUA, most of the changes were mandated by Congress in Public Law 105-219, the Credit Union Membership Access Act. Specifically, Section 201 of this new law requires that reports filed with NCUA be consistent with generally accepted accounting principles (GAAP).
This letter has two purposes. The first is to outline the changes we made to the Call Report form. The second is to invite credit unions, vendors, trade groups, and other interested parties to comment on the draft revised form. A 60-day public comment period will begin in late April 1999 and will end in late June 1999.
There are three main areas that reflect proposed changes:
- The federal credit union (FCU) and state credit union (SCU) versions of the form were combined into a single form. This combination will simplify programming of the PC5300 program and will streamline printing and mailing procedures. Relevant questions are noted as “SCU Only” or “FCU Only.” Line items affected by the combination of the FCU and SCU forms are page 2, line 37; page 3, line 7; page 8, lines 19, 20, 21, and 22.
- The presentation of the Statement of Financial Condition and Income and Expense page (pages 1, 2, and 3) was revised to comply with the GAAP reporting requirement of CUMAA. The American Institute of Certified Public Accountants (AICPA) provided comments which guided our changes in this area.
- New data collection items regarding lease activity, cyber financial services, and borrowing arrangements were added.
Following is a list of changes on the draft revised form:
- Moved Cash and Cash Equivalents from line 11 to line 1; revised related instruction (GAAP change).
- Added balance sheet accounts for Trading Securities, Available for Sale Securities, and Held-to-Maturity Securities (account codes are the same as those on Schedule C - Investments) (page 1, lines 2, 3, and 4) (GAAP change).
- Split Membership Capital and Paid in Capital at Corporate Credit Unions into two accounts for better tracking (account 769A for Membership Capital and 769B for Paid in Capital) (page 1, lines 6 and 7).
- Added a line Direct Financing Leases (account 565 for interest rate, 954 for number of leases, and 002 for amount) (page 1, line 17) (GAAP and 5300 Steering Committee change).
- Changed name of account 719 to “Allowance for Loan & Lease Losses” (page 1, line 21) (GAAP change).
- Moved NCUSIF deposit from investment section to other assets (page 1, line 25) (GAAP change).
- Revised instructions for OREO property and loans related to repossessed collateral (page 1, lines 22 and 26) (GAAP change).
- Moved shares to be included in total liabilities (page 2, lines 28, 29, 30, and 31) (GAAP change).
- Moved Uninsured Secondary Capital from the equity section to the borrowings schedule (from page 2 to page 10) (GAAP change).
- Reformatted the income and expense page to comply with GAAP. The revised page moves various accounts into four new sections: Interest Income, Interest Expense, Non-Interest Income, and Non-Interest Expense (page 3, all lines) (GAAP change). Several new account codes were added for subtotaling the new sections.
- Added two new questions about credit union websites (page 5, lines 9 and 10).
- Revised the instructions on CUSO reporting (page 1a and page 9) (GAAP change).
- Added five questions regarding credit and borrowing arrangements (page 10, lines 7, 8, 9, 10, and 11). These questions were also added to the June call report.
- Deleted the question related to securities failing the FFIEC high risk securities test (page 8). The FFIEC high risk securities test has been eliminated.
A copy of the draft revised call report is included with this letter. Comments may be sent to NCUA’s Office of Examination and Insurance, attention Polly Kennedy, 1775 Duke Street, Alexandria, VA 22314-3428.
Norman E. D’Amours