FASB ISSUES PRIVATE COMPANY COUNCIL PROPOSAL ON CONSOLIDATION OF VARIABLE
INTEREST ENTITIES
Norwalk, CT — August 22, 2013 — The Financial
Accounting Standards Board (FASB) today issued for public comment a proposal
outlining an alternative within U.S. Generally Accepted Accounting Principles
(GAAP) for applying consolidation guidance to leasing companies under common
control. Stakeholders are asked to provide comments on the Exposure Draft by
October 14, 2013.
"This proposal is intended to help lenders and other
users better align the information used in assessing the financial position of
private companies that prepare financial statements," said FASB Chairman Russell
G. Golden. "We look forward to receiving feedback on the effectiveness of the
proposal from private company stakeholders."
The proposed GAAP
alternative, Applying Variable Interest Entity Guidance to Common Control
Leasing Arrangements (formerly FIN 46(R) and FAS 167), would exempt many
private companies from applying variable interest entity guidance to lessor
companies under common control. A variable interest entity is a company in which
controlling financial interest is not established based on a majority of voting
rights.
The effective dates will be determined after the FASB and the
PCC consider stakeholder feedback on the Exposure Draft. Following receipt of
public comments, the PCC and the FASB expect to the discuss feedback at the
November 12, 2013 PCC meeting. The PCC will then consider changes to the
original proposal and take a final vote before submitting to the FASB for a
final decision on endorsement.
Comments can be provided using the electronic
feedback form available on the FASB website or emailed to director@fasb.org,
referencing File Reference No. PCC-13-02, by October 14, 2013. Written comments
should be addressed to:
Technical Director
File Reference No.
PCC-13-02
Financial Accounting Standards Board
401 Merritt 7, PO Box
5116
Norwalk, CT 06856-5116
More information on the proposal,
including a FASB
In Focus detailing the proposal, is available on the FASB website at http://www.fasb.org/ and on the PCC
website.
About the Private Company Council (PCC)
The PCC
determines alternatives to existing nongovernmental U.S. GAAP to address the
needs of users of private company financial statements, based on criteria
mutually agreed upon by the PCC and the FASB. Before being incorporated into
U.S. GAAP, PCC recommendations will be subject to a FASB endorsement process.
The PCC also serves as the primary advisory body to the FASB on the appropriate
treatment for private companies for items under active consideration on the
FASB´s technical agenda.
About the Financial Accounting Standards
Board
Since 1973, the Financial Accounting Standards Board has
been the designated organization in the private sector for establishing
standards of financial accounting and reporting. Those standards govern the
preparation of financial reports and are officially recognized as authoritative
by the Securities and Exchange Commission and the American Institute of
Certified Public Accountants. Such standards are essential to the efficient
functioning of the economy because investors, creditors, auditors, and others
rely on credible, transparent, and comparable financial information. For more
information about the FASB, visit our website at http://www.fasb.org/.