Independent
Community Bankers of America
June 28, 2004
Public Information Room
Office of the Comptroller of the Currency
Mailstop 1-5
250 E Street, SW
Washington, DC 20219
Attn: 1557-0081
|
Ms. Jennifer Johnson
Secretary,
Board of Governors
20th Street and C Streets, NW
Washington, DC 20551
Attn: Consolidated Reports of Condition and Income, 7100-0036 |
Steven F. Hanft
Clearance Officer, Legal Division
Room MB-3046
FDIC
Washington, DC 20429
|
Information Collection Comments
Chief
Counsel’s Office
Office of Thrift Supervision
1700 G Street, NW
Washington, DC 20552
Attn: 1500-0023 |
Attn: Consolidated Reports of
Condition and Income, 3064-0052
To Whom It May Concern:
The Independent Community
Bankers of America (ICBA)1 appreciates the opportunity to comment on
the proposed changes to the Call Report Glossary
entry for “Trade Date and Settlement Date Accounting.”
Background
The proposed rule would clarify that financial institutions should follow trade
data accounting for all securities, including when-issued securities. As
a result, the reference in the Glossary to conditions under which settlement
date accounting is acceptable would be eliminated. The banking regulators
believe the new rule will improve regulatory reporting by eliminating a potential
unnecessary difference between the Call Report instructions and GAAP.
Discussion
While the proposed change may appear minor, consistent with industry
practice, and in accordance with GAAP, the change likely has much broader,
possibly unintended consequences.
The majority of community
banks apply settlement date accounting for securities when such application
is not materially different from trade
date accounting. This application is consistent with GAAP’s application
of the materiality concept. In cases where application of settlement
date accounting is materially different (most notably in the cases where
quarter-end gains or losses would be incurred under trade date accounting),
adjustments are made.
While the proposed change may not specifically remove the materiality
test and may still allow institutions to utilize settlement date accounting
when it is not materially different than trade date accounting, banks
may see it as no longer permissible under the revised call report instructions.
We do not believe that the change in verbiage is necessary. Community
banks do not see a GAAP/regulatory accounting difference today. When
the difference in trade date accounting versus settlement date accounting
is material, accountants require adjustments. Banks do not utilize trade
date accounting for GAAP financial statement purposes and settlement
date accounting for Call Report purposes.
Today’s system under which trade-date accounting is preferred
but settlement date accounting is acceptable when not materially different
is consistent (between GAAP and call report reporting), practical, accepted
by the industry, and should not be changed. The removal of the “acceptable” language
may cause accountants to give little, if any, leeway even when there
is no material difference between trade and settlement date accounting.
As a result, banks may face the burdens of changing accounting systems
and practices for no positive benefit.
Thank you for the opportunity to comment. If you need additional information
or have any questions, please contact me by phone at 202-659-8111 or
by e-mail at katie.bragan@icba.org.
Sincerely,
Katherine Bragan
Associate Director of Accounting and Lending Policy
__________________________
1 ICBA
represents the largest constituency of community banks in the nation and
is dedicated exclusively to protecting the interests of the community banking
industry. We aggregate the power of our members to provide a voice for
community banking interests in Washington, resources to enhance community
bank education and marketability, and profitability options to help community
banks compete in an ever-changing marketplace.
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