LSCU COOP / Communication & Press Room / News Feed / Top Stories / Considering NCUA's Corporate CU Stabilization Fund Prepaid Assessment Plan

Considering NCUA's Corporate CU Stabilization Fund Prepaid Assessment Plan

The voluntary prepayment plan, which is contingent on prepaid commitments from credit unions totaling $500 million, would reduce this year’s Stabilization Fund assessment for all credit unions by about 6.4 basis points (bp).

A number of credit unions have raised questions about the accounting treatment of the prepayment. While the prepayment plan would reduce this year’s Stabilization Fund assessment, the amount prepaid in 2011 by a credit union would not be expensed (i.e. written-down) by that credit union until 2013. The credit union would carry the prepayment amount on its books as a prepaid asset until 2013 when the NCUA Board formally announces the 2013 Stabilization Fund assessment, at which time the credit union would expense its prepayment amount.

Although NCUA has only touched on the accounting treatment thus far, we agree with agency staff’s characterization that a credit union will account for the prepayment as a prepaid asset until the Board announces the 2013 Stabilization Fund assessment. In describing the prepayment plan, NCUA has said credit unions should consult with their accounting practitioner on accounting-related issues concerning the prepaid assessment plan. We think this does not reflect particular accounting concerns but rather is NCUA’s standard advice to credit unions.

Click here to read Bill Hampel's full report on the Corporate Stabilization Prepayment Plan.

Platinum

Gold

Bronze