On September 8 NRECA filed a comment letter with the FASB, responding to their invitation to comment on whether they should incorporate International Accounting Standards (IAS) 20 Accounting for Government Grants and Disclosure of Government Assistance into US GAAP.  We concur with the provisions of IAS 20 with the exception of the manner in which a below-market interest rate loan from a government entity is treated.  IAS 20 would have our members fair value all of their RUS debt and record interest expense going forward using the effective interest method, which would be burdensome for our members and of no value to our member’s stakeholders.  Such an outcome would require our members to keep two sets of books – one for financial reporting and one for RUS compliance.  

This, plus the act of fair valuing RUS debt, would be unduly burdensome.  Our members have been accounting for REA/RUS loans based on US GAAP, which has been in place in one form or another on this issue since 1936.  In all the years since the liability for a loan of a private company was recorded in accordance with the loan’s historical carrying value based on its contractual terms and conditions.  All RUS accounting for debt and RUS mortgage loan covenants are based on the way our members have historically recorded debt and the associated interest expense.  We do concur with the other provisions of IAS 20, however, we urged the FASB to exclude accounting for below-market interest rate loans since existing US GAAP is and has been meeting the needs of our members and their stakeholders for decades.​