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AICPA says loan splitting does not conform with GAAP.

The American Institute of CPAs announced its opposition to a regulatory proposal, known as loan splitting, that would allow banks to return part of a nonperforming loan to accrual status.

In letters to the Securities and Exchange Commission and the Federal Financial Institutions Examination Council, the AICPA stated the proposal does not conform to generally accepted accounting standards and is not suitable for general purpose financial reporting. The letters said the proposal would also "present particular implementation problems for preparers of financial statements and their independent auditors."

While the AICPA recognizes that financial information needed by regulatory agencies may be different from information contained in GAAP statements, the Institute continues to believe that general purpose financial reporting should not be used to achieve regulatory or public policy objectives. Pointing to the savings and loan industry, Joseph F. Moraglio, AICPA vice president-federal government relations, said, "We have seen what can happen when that approach is taken. " n
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Publication:Journal of Accountancy
Date:Jul 1, 1991
Words:156
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