Audit Requirement for Credit Union Service Organizations, 55227-55228 [05-18749]
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Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Rules and Regulations
Department’s Commodity Credit
Corporation, the Commodity Credit
Corporation, or any entity determined
by the Commodity Credit Corporation
shall deduct and remit to the Board,
from the proceeds of the loan paid to the
producer, one (1%) percent of the loan
value of the peanuts as determined by
the warehouse receipt accompanying
such peanuts, no more than 60 days
after the last day of the month in which
the peanuts were placed under a
marketing assistance loan.
(e) If a producer places peanuts under
a marketing assistance loan and
subsequently redeems and sells such
peanuts at a price greater than the loan
amount, the producer shall pay the
difference between the sales price and
the loan value of the peanuts multiplied
by one (1%) percent to the Board within
sixty (60) days after the final day of the
loan availability period.
(f) All assessments collected under
this section are to be used for expenses
and expenditures pursuant to this Order
and for the establishment of an
operating reserve as prescribed in the
Order.
(g) The Board shall impose a late
payment charge on any person who fails
to remit to the Board the total amount
for which the person is liable on or
before the payment due date established
under this section. The late payment
charge will be in the form of interest on
the outstanding portion of any amount
for which the person is liable. The rate
of interest shall be prescribed in
regulations issued by the Secretary.
(h) Persons failing to remit total
assessments due in a timely manner
may also be subject to actions under
federal debt collection procedures.
(i) The Board may authorize other
organizations to collect assessments on
its behalf with the approval of the
Secretary.
(j) The assessment rate may not be
increased unless the new rate is
approved by a referendum among
eligible producers.
Dated: September 15, 2005.
Lloyd C. Day,
Administrator, Agricultural Marketing
Service.
[FR Doc. 05–18759 Filed 9–20–05; 8:45 am]
BILLING CODE 3410–02–P
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14:27 Sep 20, 2005
Jkt 205001
presentation when one of the
enterprises in a group directly or
indirectly has a controlling financial
interest in another.
NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Part 712
Audit Requirement for Credit Union
Service Organizations
National Credit Union
Administration (NCUA).
ACTION: Final rule.
AGENCY:
SUMMARY: NCUA is amending its rule
concerning credit union service
organizations (CUSOs) to provide that a
wholly owned CUSO need not obtain its
own annual financial statement audit
from a certified public accountant if it
is included in the annual consolidated
audit of the federal credit union (FCU)
that is its parent. The amendment will
reduce regulatory burden and conform
the regulation with agency practice,
which since 1997 has been to view
credit unions with wholly owned
CUSOs in compliance with the rule if
the parent FCU has obtained an annual
financial statement audit on a
consolidated basis.
DATES: This rule is effective on October
21, 2005.
FOR FURTHER INFORMATION CONTACT: Ross
P. Kendall, Staff Attorney, Office of
General Counsel, at telephone (703)
518–6540.
SUPPLEMENTARY INFORMATION:
Background
On March 17, 2005, the NCUA Board
requested comment on a proposed
change to part 712 of its regulations to
provide that that a CUSO that is wholly
owned need not secure its own public
accounting firm financial statement
audit if it is included on a consolidated
basis in the audit of the FCU itself. 70
FR 14579 (March 23, 2005). The
proposal recognized that, where a CUSO
is controlled by an FCU by virtue of its
ownership of one hundred percent of its
voting shares, generally accepted
accounting principles (GAAP) call for
the preparation of financial statements
of both the FCU and the CUSO on a
consolidated basis.
As noted in the preamble to the
proposed rule, consolidated financial
statements present the results of
operations, financial position, and cash
flows of a parent and its subsidiaries as
if the group were a single enterprise.
Under GAAP, consolidated financial
statements generally include enterprises
in which the parent has a controlling
financial interest, usually, a majority
voting interest. There is a presumption
that consolidated statements are more
meaningful than separate statements
and are usually necessary for a fair
PO 00000
Frm 00003
Fmt 4700
Sfmt 4700
55227
Summary of Comments
NCUA received twelve comments on
the proposal, eleven of which were fully
supportive of the amendment. These
commenters noted several bases for
their support, including efficiency,
flexibility and cost savings, as well as
the generally more thorough and
accurate financial picture that emerges
when the operations of corporate
parents and subsidiaries are included in
a consolidated financial statement. The
one commenter that did not offer
express support did not indicate
opposition to the proposal, but rather
raised two questions about the operation
of the rule in specified circumstances.
In the preamble to the proposed rule,
the Board specifically recognized that
GAAP would allow for consolidated
financial reporting in cases that involve
a CUSO that is majority owned. The
Board noted, however, that it was not
recommending extension of the rule to
those cases, and indicated its belief that
the proposal would ensure that
prospective minority investors in
CUSOs would have maximum
disclosure of potential risks to their
investment. Nine commenters
recommended that NCUA extend the
exemption for a separate audit to
majority owned CUSOs, instead of
limiting it to cases of one hundred
percent ownership. Two of these
commenters conditioned their support
for this expanded treatment on
including in the rule a safeguard to
allow a minority owner to request the
CUSO to obtain a separate opinion
audit.
The Board remains convinced that the
original proposal, with its limited
application only to cases involving one
hundred percent ownership of the
CUSO, is the best course. Absent a
provision in the rule, a minority
investor could encounter some
difficulty in asserting its right to a
separate opinion audit. The Board notes,
in this respect, that its concern for the
safety and soundness of credit unions,
rather than assuring that its rules
conform in all respects to what may be
formally permissible under GAAP, is of
paramount importance. Accordingly,
NCUA is adopting the proposed
amendments as a final rule without
change.
The Board notes that the rule change
extends to cases involving CUSO
subsidiaries that are also wholly owned.
While cases of second tier CUSOs are
relatively rare, the principles of the rule
E:\FR\FM\21SER1.SGM
21SER1
55228
Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Rules and Regulations
would apply. Thus, where the second
tier CUSO is itself wholly owned by a
wholly owned first tier CUSO, use of a
consolidated opinion audit capturing
both levels would be permissible.
Regulatory Procedures
Regulatory Flexibility Act
The final rule relieves a CUSO that is
wholly owned from having to secure a
separate opinion audit of its books, if it
is included in the annual consolidated
opinion audit of the credit union that is
its parent. The Board has determined
and certifies that the rule will not have
a significant economic impact on a
substantial number of small credit
unions. Accordingly, the NCUA Board
has determined that a Regulatory
Flexibility Analysis is not required.
Paperwork Reduction Act
NCUA has determined that the
proposed regulation does not increase
paperwork requirements under the
Paperwork Reduction Act of 1995 and
regulations of the Office of Management
and Budget.
Executive Order 13132
Executive Order 13132 encourages
independent regulatory agencies to
consider the impact of their actions on
state and local interests. In adherence to
fundamental federalism principles,
NCUA, an independent regulatory
agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the executive
order. The final rule will apply only to
federally-chartered credit unions. It will
not have substantial direct effects on the
states, on the relationship between the
national government and the states, or
on the distribution of power and
responsibilities among the various
levels of government. NCUA has
determined that this proposal does not
constitute a policy that has federalism
implications for purposes of the
executive order.
The Treasury and General Government
Appropriations Act, 1999—Assessment
of Federal Regulations and Policies on
Families
The NCUA has determined that the
final rule will not affect family wellbeing within the meaning of section 654
of the Treasury and General
Government Appropriations Act, 1999,
Public Law 105–277, 112 Stat. 2681
(1998).
reporting requirement is triggered in
instances where NCUA issues a final
rule as defined by Section 551 of the
Administrative Procedure Act. 5 U.S.C.
551. The Office of Management and
Budget has determined that this rule is
not a major rule for purposes of the
Small Business Regulatory Enforcement
Fairness Act of 1996.
List of Subjects in 12 CFR Part 712
Administrative practices and
procedure, Credit, Credit unions,
Investments, Reporting and record
keeping requirements.
By the National Credit Union
Administration Board on September 15,
2005.
Mary F. Rupp,
Secretary of the Board.
For the reasons stated in the preamble,
NCUA amends 12 CFR part 712 as
follows:
I
PART 712—CREDIT UNION SERVICE
ORGANIZATIONS (CUSOs)
1. The authority citation for part 712
continues to read as follows:
I
Authority: 12 U.S.C. 1756, 1757(5)(D), and
(7)(I), 1766, 1782, 1784, 1785 and 1786.
2. Amend § 712.3 by revising
paragraph (d)(2) to read as follows:
I
§ 712.3 What are the characteristics of and
what requirements apply to CUSOs?
*
*
*
*
*
(d) * * *
(2) Prepare quarterly financial
statements and obtain an annual
financial statement audit of its financial
statements by a licensed certified public
accountant in accordance with generally
accepted auditing standards. A wholly
owned CUSO is not required to obtain
a separate annual financial statement
audit if it is included in the annual
consolidated financial statement audit
of the credit union that is its parent; and
*
*
*
*
*
[FR Doc. 05–18749 Filed 9–20–05; 8:45 am]
BILLING CODE 7535–01–P
14:27 Sep 20, 2005
Jkt 205001
PO 00000
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2005–21189; Directorate
Identifier 2005–NM–055–AD; Amendment
39–14279; AD 2005–19–14]
RIN 2120–AA64
Airworthiness Directives; Airbus Model
A318–100, A319–100, A320–200, A321–
100, and A321–200 Series Airplanes;
and Model A320–111 Airplanes
Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Final rule.
AGENCY:
SUMMARY: The FAA is adopting a new
airworthiness directive (AD) for certain
Airbus Model A318–100, A319–100,
A320–200, A321–100, and A321–200
series airplanes; and Model A320–111
airplanes. This AD requires
modification of the electrical bonding of
all structures and systems installed
inside the center fuel tank. This AD
results from fuel system reviews
conducted by the manufacturer. We are
issuing this AD to prevent electrical
arcing in the center fuel tank due to
inadequate bonding, which could result
in an explosion of the center fuel tank
and consequent loss of the airplane.
DATES: This AD becomes effective
October 26, 2005.
The Director of the Federal Register
approved the incorporation by reference
of certain publications listed in the AD
as of October 26, 2005.
ADDRESSES: You may examine the AD
docket on the Internet at https://
dms.dot.gov or in person at the Docket
Management Facility, U.S. Department
of Transportation, 400 Seventh Street
SW., Nassif Building, Room PL–401,
Washington, DC.
Contact Airbus, 1 Rond Point Maurice
Bellonte, 31707 Blagnac Cedex, France,
for service information identified in this
AD.
FOR FURTHER INFORMATION CONTACT: Tim
Dulin, Aerospace Engineer,
International Branch, ANM–116, FAA,
Transport Airplane Directorate, 1601
Lind Avenue, SW., Renton, Washington
98055–4056; telephone (425) 227–2141;
fax (425) 227–1149.
SUPPLEMENTARY INFORMATION:
Examining the Docket
Small Business Regulatory Enforcement
Fairness Act
The Small Business Regulatory
Enforcement Fairness Act of 1996 (Pub.
L. 104–121) provides generally for
congressional review of agency rules. A
VerDate Aug<31>2005
DEPARTMENT OF TRANSPORTATION
You may examine the AD docket on
the Internet at https://dms.dot.gov or in
person at the Docket Management
Facility office between 9 a.m. and 5
p.m., Monday through Friday, except
Frm 00004
Fmt 4700
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21SER1
]]>Agencies
[Federal Register Volume 70, Number 182 (Wednesday, September 21, 2005)]
[Rules and Regulations]
[Pages 55227-55228]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-18749]
=======================================================================
-----------------------------------------------------------------------
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 712
Audit Requirement for Credit Union Service Organizations
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: NCUA is amending its rule concerning credit union service
organizations (CUSOs) to provide that a wholly owned CUSO need not
obtain its own annual financial statement audit from a certified public
accountant if it is included in the annual consolidated audit of the
federal credit union (FCU) that is its parent. The amendment will
reduce regulatory burden and conform the regulation with agency
practice, which since 1997 has been to view credit unions with wholly
owned CUSOs in compliance with the rule if the parent FCU has obtained
an annual financial statement audit on a consolidated basis.
DATES: This rule is effective on October 21, 2005.
FOR FURTHER INFORMATION CONTACT: Ross P. Kendall, Staff Attorney,
Office of General Counsel, at telephone (703) 518-6540.
SUPPLEMENTARY INFORMATION:
Background
On March 17, 2005, the NCUA Board requested comment on a proposed
change to part 712 of its regulations to provide that that a CUSO that
is wholly owned need not secure its own public accounting firm
financial statement audit if it is included on a consolidated basis in
the audit of the FCU itself. 70 FR 14579 (March 23, 2005). The proposal
recognized that, where a CUSO is controlled by an FCU by virtue of its
ownership of one hundred percent of its voting shares, generally
accepted accounting principles (GAAP) call for the preparation of
financial statements of both the FCU and the CUSO on a consolidated
basis.
As noted in the preamble to the proposed rule, consolidated
financial statements present the results of operations, financial
position, and cash flows of a parent and its subsidiaries as if the
group were a single enterprise. Under GAAP, consolidated financial
statements generally include enterprises in which the parent has a
controlling financial interest, usually, a majority voting interest.
There is a presumption that consolidated statements are more meaningful
than separate statements and are usually necessary for a fair
presentation when one of the enterprises in a group directly or
indirectly has a controlling financial interest in another.
Summary of Comments
NCUA received twelve comments on the proposal, eleven of which were
fully supportive of the amendment. These commenters noted several bases
for their support, including efficiency, flexibility and cost savings,
as well as the generally more thorough and accurate financial picture
that emerges when the operations of corporate parents and subsidiaries
are included in a consolidated financial statement. The one commenter
that did not offer express support did not indicate opposition to the
proposal, but rather raised two questions about the operation of the
rule in specified circumstances.
In the preamble to the proposed rule, the Board specifically
recognized that GAAP would allow for consolidated financial reporting
in cases that involve a CUSO that is majority owned. The Board noted,
however, that it was not recommending extension of the rule to those
cases, and indicated its belief that the proposal would ensure that
prospective minority investors in CUSOs would have maximum disclosure
of potential risks to their investment. Nine commenters recommended
that NCUA extend the exemption for a separate audit to majority owned
CUSOs, instead of limiting it to cases of one hundred percent
ownership. Two of these commenters conditioned their support for this
expanded treatment on including in the rule a safeguard to allow a
minority owner to request the CUSO to obtain a separate opinion audit.
The Board remains convinced that the original proposal, with its
limited application only to cases involving one hundred percent
ownership of the CUSO, is the best course. Absent a provision in the
rule, a minority investor could encounter some difficulty in asserting
its right to a separate opinion audit. The Board notes, in this
respect, that its concern for the safety and soundness of credit
unions, rather than assuring that its rules conform in all respects to
what may be formally permissible under GAAP, is of paramount
importance. Accordingly, NCUA is adopting the proposed amendments as a
final rule without change.
The Board notes that the rule change extends to cases involving
CUSO subsidiaries that are also wholly owned. While cases of second
tier CUSOs are relatively rare, the principles of the rule
[[Page 55228]]
would apply. Thus, where the second tier CUSO is itself wholly owned by
a wholly owned first tier CUSO, use of a consolidated opinion audit
capturing both levels would be permissible.
Regulatory Procedures
Regulatory Flexibility Act
The final rule relieves a CUSO that is wholly owned from having to
secure a separate opinion audit of its books, if it is included in the
annual consolidated opinion audit of the credit union that is its
parent. The Board has determined and certifies that the rule will not
have a significant economic impact on a substantial number of small
credit unions. Accordingly, the NCUA Board has determined that a
Regulatory Flexibility Analysis is not required.
Paperwork Reduction Act
NCUA has determined that the proposed regulation does not increase
paperwork requirements under the Paperwork Reduction Act of 1995 and
regulations of the Office of Management and Budget.
Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, NCUA, an independent
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies
with the executive order. The final rule will apply only to federally-
chartered credit unions. It will not have substantial direct effects on
the states, on the relationship between the national government and the
states, or on the distribution of power and responsibilities among the
various levels of government. NCUA has determined that this proposal
does not constitute a policy that has federalism implications for
purposes of the executive order.
The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families
The NCUA has determined that the final rule will not affect family
well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999, Public Law 105-277, 112
Stat. 2681 (1998).
Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996
(Pub. L. 104-121) provides generally for congressional review of agency
rules. A reporting requirement is triggered in instances where NCUA
issues a final rule as defined by Section 551 of the Administrative
Procedure Act. 5 U.S.C. 551. The Office of Management and Budget has
determined that this rule is not a major rule for purposes of the Small
Business Regulatory Enforcement Fairness Act of 1996.
List of Subjects in 12 CFR Part 712
Administrative practices and procedure, Credit, Credit unions,
Investments, Reporting and record keeping requirements.
By the National Credit Union Administration Board on September
15, 2005.
Mary F. Rupp,
Secretary of the Board.
0
For the reasons stated in the preamble, NCUA amends 12 CFR part 712 as
follows:
PART 712--CREDIT UNION SERVICE ORGANIZATIONS (CUSOs)
0
1. The authority citation for part 712 continues to read as follows:
Authority: 12 U.S.C. 1756, 1757(5)(D), and (7)(I), 1766, 1782,
1784, 1785 and 1786.
0
2. Amend Sec. 712.3 by revising paragraph (d)(2) to read as follows:
Sec. 712.3 What are the characteristics of and what requirements
apply to CUSOs?
* * * * *
(d) * * *
(2) Prepare quarterly financial statements and obtain an annual
financial statement audit of its financial statements by a licensed
certified public accountant in accordance with generally accepted
auditing standards. A wholly owned CUSO is not required to obtain a
separate annual financial statement audit if it is included in the
annual consolidated financial statement audit of the credit union that
is its parent; and
* * * * *
[FR Doc. 05-18749 Filed 9-20-05; 8:45 am]
BILLING CODE 7535-01-P
