Accounting and Auditing Update: Current Issues and What Lies Ahead

By Gabe Nachand, Partner, Moss Adams LLP, and Ryan Sturgis, Senior Manager, Moss Adams LLP

The current economic environment has created many challenges from an accounting and regulatory compliance perspective, and significant change is on the horizon.

Credit unions are continually challenged in areas such as fair value, mergers and acquisitions, and allowance methodologies and impairments. Not only is compliance in these areas proving to be challenging today, but there are also very significant projects currently in the works by the Financial Accounting Standards Board (FASB) that will drastically change your organizations financial reporting process as well as ultimate results.

Take, for example, the allowance for loan loss estimate. Current guidance has been around for many years, yet it seems many credit unions are challenged year after year in terms of adequacy. Part of recent criticism is a direct result of the depressed economic environment that has deeply affected members around the nation. Credit unions in general found themselves critically underfunded from an allowance perspective when the market began its tumble; this helped to demonstrate the flaws with current allowance methodologies.

Hoping to fix current day funding deficiencies, as well as to better align ourselves with international convergence goals, a new model is being pursued. The current way of reserving for probable losses based on events that have already occurred (incurred losses) may change to a model driven by expectations of future loss events and related lifetime losses (expected losses).

Moving away from incurred to expected losses is just one of the dramatic changes that are being discussed by the Federal Accounting Standards Board (FASB), and it is important for each credit union to understand how this new guidance, along with other major projects, will impact organizational processes as well as financial results.

In our educational breakout session at the Northwest Credit Union Assocation’s 2012 Convention and Annual Business Meeting, entitled, “Accounting & Auditing Update – Dealing with Current Issues and What Lies Ahead,” we will walk through today’s challenges in the above areas, combined with providing an understanding of what is to come. Moss Adams LLP has been a leading provider to the financial services industry for more than three decades and currently serves more than 400 depository and non-depository institutions. This long-term commitment to the industry has given us a unique insight to not only issues impacting credit unions, but to the financial service industry as a whole.

Interested in Learning More?

Ryan Sturgis has more than 14 years of financial institution experience, with 11 of those years being focused in our Financial Services Group, specifically focusing on credit union engagements. Sturgis is the co-chair of Moss Adams LLP’s Credit Union Services Group, acts as an instructor for annual Supervisory Committee trainings and credit union conferences, manages and participates in financial and operational audits, and routinely makes management recommendations for enhancing internal controls and efficiency improvements.

Gabe Nachand, CPA, has more than 16 years’ experience in public accounting and has been engaged in financial institution auditing for most of his career. He is graduate of Pacific Coast Banking School and is a member of the Moss Adams Financial Services Group, focused on providing financial statement audits, internal audits, and related consulting services to financial institutions, including due diligence for mergers and acquisitions, FDIC-assisted acquisitions, and enterprise risk management implementation and evaluation.

Nachand and Sturgis will be facilitating an educational breakout session at Convention at 1:30 p.m. on Oct. 3, allowing attendees to deepen their understanding of focus areas in today’s environment while looking ahead at what the future of the FASB landscape has in store.

Attendees will:

  1. Understand common flaws in today’s accounting over the ALLL and related impairments, Fair Value, Mergers & Acquisitions, TDRs, among others;
  2. Gain knowledge of future accounting areas which will dramatically impact each credit union; and
  3. Ensure proper knowledge and reporting controls are in place to avoid criticism.

For more information or to register for Convention, visit the NWCUA’s dedicated Convention website.

 

Questions? Contact Training Programs Coordinator Yuri Jung: 206.340.4817, yjung@nwcua.org.

 

Posted in Advocacy News, CUNA, Events, Federal, MAXX Annual Convention, NCUA, NWCUA.