Year 2000 Status Reports Soon Required by
Banks
The British Bankers Association (BBA), which represents
more than 300 member banks from 60 countries is recommending that "banks
regular credit reviews incorporate questions as to how the customer is addressing
the Year 2000 issue". As well, a document released in September 1997
by the Basle Committee on Banking Supervision suggests banks recognize "that
correspondents and customers pose credit and other risks" because of
the impact of Year 2000.
Assessment: Organizations should be ready to not only answer these questions
but to create a document trail on Year 2000 activities, to not only satisfy
bankers, but to provide legal protection from other Year 2000 risks. It
should be noted that this would most likely only be required for credit
applications for new or extended credit.
Year 2000 Tax Treatment
In the United States, the IRS has issued a ruling
requiring the amortization of the Year 2000 costs (Nov. 1997 Revenue Bulletin
1997-45) of conversion or replacement of computer software to recognize
Year 2000 dates. "The greater flexibility in making business decisions
will be welcomed," states Information Technology Association of America
(ITAA) President Harris Miller. This is, of course, so the IRS doesn't take
a huge revenue cut too quickly. Unfortunately this creates a dilemma because
the FASB, which sets the accounting standards in the U.S.A., requires Year 2000
costs to be expensed. You can't take the tax deduction at the same time
your revenue is reduced. This reduces cash flow. Canadian accounting bodies
and Revenue Canada have made no pronouncements about any Year 2000 accounting
or tax treatments but will likely go along with American standards.
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