AcSEC Extends SOP Comment Period

In May 2000 AcSEC issued an exposure draft of a proposed Statement of Position (SOP) for entities that lend to or finance the activities of others. The original comment period ended August 31, 2000. Several respondents commented that the ED's scope, particularly relating to the inclusion of insurance companies, was unclear. AcSEC agreed and has, in response, extended the comment period to October 31, 2000.

All entities (except for those, such as investment companies, broker-dealers and employee benefit plans, that carry loans receivable at fair value with gains and losses included in earnings) that lend to or finance the activities of others, not just finance companies, have been subject to the provisions of the existing audit and accounting guide, Audits of Finance Companies. Although the scope of that guide explicitly excluded insurance companies, the proposed SOP is intended to include the financing activities of such companies.

The ED provides additional guidance for banks, savings institutions, credit unions, finance companies, corporate credit unions and mortgage companies. It eliminates the differences in accounting and financial reporting established by the guides, Banks and Savings Institutions, Audits of Credit Unions and Audits of Finance Companies, and carries forward accounting guidance for transactions that are determined to be unique to certain financial institutions. The provisions, when final, would be incorporated in a combined guide, applicable to all entities that lend to or finance the activities of others.

The text of the ED, Accounting by Certain Financial Institutions and Entities That Lend to or Finance the Activities of Others, is available at www.aicpa.org/members/div/acctstd/edo/lending.htm.