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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.