Development Best Practices in Credit Union Supervision: Accounting Norms and Principles

This paper explains that the purpose of an accounting system for a credit union is to provide the management with complete and accurate financial information that can be used to operate the credit union safely and effectively.

The paper discusses the following tips for an efficient credit union accounting system:

• Accounts should be stated in terms of the monetary amount or value of the transaction;
• Material facts relating to financial activity should be recognized in accounting and financial statements;
• There should be proper accounting and dividend periods and a double entry accounting system;
• A running history of each day's accounts and transactions should be kept;
• There should be full and fair disclosure of the financial condition and operational results.

The paper then lists principles relating to assets for a credit union using accrual-based accounting. This includes recording of:

• Assets;
• Loans outstanding;
• Accounts receivable;
• Allowances for loan losses;
• Cash and investments;
• Depreciation;
• Pre-paid expenses;
• Liabilities;
• Accounts payable and external credit payable;
• Accrued interest on deposits and accrued expenses;
• Capital reserves;
• Donated equity;
• Asset revaluation accounts, etc.

It concludes by listing the principles for recording of income and expenses that are needed for full and fair disclosure.