ABA: Proposed accounting standards place undue burden on banks

A proposal by the Financial Accounting Standards Board to require more detailed information about expenses in public companies’ financial statements would not offer discernible benefits for the users of bank financial statements and instead would result in additional costs for all parties involved, the American Bankers Association said Monday in comments to the FASB.

The FASB in July released a proposed accounting standards update that would require more details about commonly presented expense captions in financial statements—things such as cost of sales; selling, general and administrative expenses; and research and development. In its letter, ABA noted that banks’ 10-K public disclosure filings with the Securities and Exchange Commission are already twice as long on average as those for other industries, with audited financial statements in the filings more than 2.5 times as long. Preparers of bank financial statements “already carry a disproportionate financial reporting burden,” the association said.

ABA added that the generally accepted accounting principles issued by the FASB do not need to be the sole source in meeting financial statement user needs. SEC regulations already set forth robust disclosure requirements tailored to the banking sector, and unlike the proposed accounting standards, those requirements do not unduly affect industries outside those targeted, the association said. “A similar targeted approach on an industry-by-industry basis can be considerably more effective in addressing certain user needs.”

At the same time, ABA said that it approved of language in the update to allow the use of the definition of salaries and employee benefits currently required in SEC disclosures rather than change the reporting to comply with the proposed requirements.