Reply #58: The Banking Industry Struggles with SFAS 133 [View All]

[54anickel]

http://www.accountingweb.com/cgi-bin/item.cgi?id=101227

AccountingWEB.com - Aug-23-2005 - The Federal Home Loan Bank of Dallas (FHLB Dallas) and the Federal Home Loan Bank of Atlanta (FHLB Atlanta) announced plans Monday to restate their financial statements for the years 2001 through 2004 and the first quarter of 2005. The Federal Home Loan Bank of Indianapolis (FHLBI) had announced its intention to issue restatements for the same periods on Friday. All three regional banks in the Federal Home Loan Bank System, were found to have incorrectly applied a provision of Statement of Financial Accounting Standards 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133).

Neither FHLB Dallas nor FHLBI anticipate that the corrections to their hedge accounting will have a material effect on their financial statements. In its statement, FHLB Atlanta said that once the review of all hedging transactions had been completed, the Bank may be required to make adjustments which could be material to the Bank’s financial statements.

“In the course of preparing for SEC registration we discovered accounting errors related to SFAS 133,” said Martin L. Ledger, President-CEO of FHLB Indianapolis, in the Bank’s statement. “We do not believe this correction detracts from FHLBI’s core strengths or its progress toward achieving FHLBI’s strategic plan.”

Lee Puschaver, Executive Vice President and CFO of FHLB Atlanta said in the Bank’s announcement, “While we took great care in implementing SFAS 133 in 2001, including a review by our independent auditors, SFAS 133 is a very complex accounting standard.”

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