ABA in a letter last week urged the Financial Accounting Standards Board to drop its proposal to expand the disclosures of government assistance a company receives. ABA called the scope of the proposal “overly broad and undefined,” adding that it would burden banks with significant costs to implement the new systems necessary to capture the required information.
As proposed, banks would be required to implement systems to identify and capture interactions with government entities, make determinations as to the scope and value of these transactions and prepare disclosures. While the project was originally intended to identify circumstances where a company received local tax incentives for relocation or hiring goals, ABA pointed out that the FASB requirements could apply to many transactions with GSEs, as well as many loans and investments held by banks, and that determining which transactions qualify would be difficult. The letter further stated that the requirement to value the benefit of government assistance is unworkable.
FASB is expected to make a decision on this proposal sometime this year, though it is unclear when the proposal would take effect if approved. For more information, contact ABA’s Mike Gullette.
