Section 190.60  General Accounting Procedures

a)         All credit unions will maintain their books and records in accordance with generally accepted accounting principles (Wiley GAAP, published by John Wiley & Son, 605 Third Avenue, New York NY 110158-0112, 2002, no later editions or amendments included), and in such a manner as to provided an accurate report of financial condition, with the exception of the selection of the accounting method to be used or when otherwise directed by statutory requirements.  In the event that a credit union is using the modified cash basis of accounting, and the Director determines that such method causes a material misstatement of the financial condition of the credit union, he shall require that the credit union convert to the full accrual method of accounting except where factors such as prohibitive cost or lack of expertise are evident.  The Division shall notify in writing any credit union required to convert to the full accrual method and provide 60 days to review and respond.

b)         If the credit union does not concur with the Division's requirement, it may request a formal hearing under 38 Ill. Adm. Code 190.20.  The order to change accounting procedures is stayed pending the final outcome of the hearing.

c)         Regardless of the method of accounting in use, the following items must be accrued or amortized:

1)         Dividends on Classes of Shares;

2)         Premiums and Discounts on purchased investments;

3)         Depreciation of Fixed Assets;

4)         Interest on investments when paid less frequently than once a year.

d)         If a credit union uses the accrual method to recognize interest income on consumer loans, such accrual must be stopped and income recognized on a cash basis whenever the borrower is three months or more delinquent in contractual payments.

e)         Credit unions' charts of accounts must be kept in sufficient detail to allow accurate and full completion of all reports required by Section 9 of the Act [205 ILCS 305/9].

f)          Pursuant to the authority granted the Director by Section 60(B) of the Act [205 ILCS 305/60] to decrease the reserve requirement set forth in Section 60(A) of the Act, a credit union is exempt from the reserve requirement of Section 60(A) provided:

1)         The credit union's net worth to asset ratio is 7% or greater; or

2)         If the credit union's net worth to asset ratio at the end of a calendar quarter is less than 7%, the credit union transfers an amount equal to .1% of the credit union's assets from undivided earnings to regular reserve at the end of the next calendar quarter and quarterly thereafter until the net worth to assets ratio is equal to or greater then 7%.

(Source:  Amended at 30 Ill. Reg. 18919, effective December 4, 2006)