Norwalk,
CT, October 9, 2003—At its Board
meeting yesterday, the FASB decided to defer to the fourth quarter from the
third quarter the implementation date for Interpretation No. 46, Consolidation
of Variable Interest Entities, issued earlier this year. This deferral only
applies to variable interest entities that existed prior to February 1, 2003.
The complete text of the deferral will be available on the FASB website on October 10, 2003.
The
FASB believes that additional time is needed for companies and their auditors
to complete the evaluation of existing variable interest entities and to
determine which of those entities are required to be included in their
consolidated financial statements.
The
requirements of Interpretation 46 applied immediately to variable interest
entities created after January 31, 2003, and those situations are not subject
to the deferral. Pursuant to this deferral, public companies must complete
their evaluations of variable interest entities that existed prior to February
1, 2003, and the consolidation of those for which they are the primary
beneficiary for financial statements issued for the first period ending after
December 15, 2003. For calendar year companies, consolidation of previously
existing variable interest entities will be required in their December 31, 2003
financial statements. While many companies may need the additional time being
allotted, earlier application of Interpretation 46 is encouraged.
In
January 2003, the FASB issued Interpretation 46 to improve financial reporting
for variable interest entities, off-balance sheet structures that often have
highly complex arrangements. The objective of Interpretation 46 is to improve
financial reporting by companies involved with variable interest entities by
requiring that a variable interest entity be consolidated by the company that
is subject to a majority of the economic risks and/or rewards related to that
entity.