Full text of Federal Reserve Bank of New York Circulars : Adoption of Generally Accepted Accounting Principles for the Purpose of Regulatory Reporting

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FEDERAL RESERVE BANK
OF NEW YORK

f\\-1OSISL
D e cem b er 11, 1995

Adoption of Generally Accepted Accounting Principles
for the Purpose of Regulatory Reporting

To All State Member Banks and Bank Holding Companies
in the Second Federal Reserve District, and Others Concerned:
P rin te d o n th e rev erse side is a statem en t issued b y th e F ed eral F in a n cial In stitu tio n s
E x a m in a tio n C o u n cil (F F IE C ) ap p ro v in g th e ad o p tio n o f g en erally accep ted acco u n tin g p rin cip les
(G A A P ) as th e re p o rtin g b asis fo r fin an cial in stitu tio n s to fo llo w in su b m ittin g R ep o rts o f C o n d itio n
an d In c o m e to th e ir re g u la to ry agencies, effectiv e w ith th e M arch 1997 re p o rt date. Q u e stio n s
re g ard in g th is m a tte r m a y b e d irected to S arah D ahlgren, M anager, B an k A n a ly sis D e p artm en t
(T el. N o . 2 1 2 -7 2 0 -7 5 3 7 ).




Christine M. C umming,

Senior Vice President

(O v er)

FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

T h e E x am in atio n C o u n cil anno u n ced th at it has approved th e ad o p tio n o f g en erally accep ted
a c c o u n tin g p rin cip les (G A A P ) as th e rep o rtin g basis for th e balan ce sheet, in co m e statem en t, an d
re la ted sch e d u le s in th e b an k R eports o f C o n d itio n and Incom e (C all R ep o rt), effectiv e w ith th e M arch
1997 re p o rt date. A d o p tin g G A A P as th e rep o rtin g b asis in th e b asic sch ed u les o f th e C all R ep o rt w ill
elim in a te ex istin g d ifferen ces betw een ban k reg u lato ry rep o rtin g stan d ard s an d G A A P su ch as th e
a c co u n tin g tre a tm e n t o f assets so ld w ith recourse, futures, forw ards, an d o p tio n contracts, n ettin g on
th e b alan ce sh eet, and ex cess servicing fees.
T h e E x am in a tio n C o u n c il’s actio n w ill b rin g b ank reg u lato ry re p o rtin g into co n fo rm ity w ith
th e G A A P re p o rtin g b asis alread y used fo r savings asso ciatio n T h rift F in an cial R ep o rts an d F ederal
R eserv e b an k h o ld in g c o m p an y F R -Y R eports. T his uniform re p o rtin g b asis is co n sisten t w ith th e
o b jectiv es o f S ectio n 3 0 7 (b ) o f th e R ieg le C o m m u n ity D ev elo p m en t an d R eg u lato ry Im p ro v e m e n t A ct
o f 1994, w h ic h re q u ires th e federal b an k in g agencies to w o rk jo in tly to d ev elo p a sin g le form fo r th e
filin g o f co re in fo rm atio n b y banks, savin g s associations, and b an k h o ld in g co m p an ies. T h e ad o p tio n
o f G A A P also w ill re su lt in g reater co n sisten cy in th e in form ation co llected in re g u la to ry rep o rts and
g en eral p u rp o se fin an c ial statem ents. F urtherm ore, th e E x am in atio n C o u n cil b eliev e s th a t ad o p tin g
G A A P w ill red u ce th e rep o rtin g b u rd en as w ell as an y co n fu sio n on th e p art o f u sers ab o u t differen ces
in th e rep o rtin g p rin cip les g o v ern in g reg u lato ry reports and financial statem en ts.
A s G A A P d o es n o t require th e disclo su re o f all o f th e in fo rm atio n n eed ed b y th e federal
b an k in g ag en cies an d d o es n o t address all o f th e ag e n cies’ su p erv iso ry co n cern s, in stitu tio n s w o u ld
still h av e to rep o rt, in su p p lem ental schedules and item s, som e in fo rm atio n need ed fo r su p erv iso ry and
o th e r p u rp o ses. F o r ex am p le, su p p lem en tal inform ation w o u ld be need ed fo r su p erv iso ry m o n ito rin g ,
fo r th e c a lc u latio n o f cap ital and o th er su p erv iso ry ratios and lim its, fo r d ep o sit in su ran ce assessm en ts,
an d fo r m o n e ta ry p o licy p u rposes. F urtherm ore, o v er th e co m in g m o n th s th e ag en cies w ill co n sid er
w h e th e r an y ac tio n s, such as am en d m en ts to reg u lato ry capital gu id elin es, sh o u ld be ta k e n to add ress
th e su p erv iso ry co n cern s u n d erly in g th e d ifferences betw een reg u lato ry re p o rtin g stan d ard s an d G A A P.
M o reo v er, th e E x am in atio n C o u ncil and th e agencies w ill co n tin u e w h en n ecessary to issu e sp ecific
re p o rtin g g u id an ce th a t falls w ith in th e range o f acceptable practice u n d er G A A P (fo r ex a m p le , as is
cu rren tly th e case fo r th e allo w ance fo r loan and lease losses), and each ag en cy w ill re ta in ex istin g
au th o rity to req u ire an in stitu tio n to rep o rt a tran sactio n in reg u lato ry rep o rts in acco rd an ce w ith th e
a g e n c y ’s in terp re tatio n o f G A A P .