2.2 Decision Maker
ASC 810-10 — Glossary
Decision Maker
An entity or entities with the power to direct the activities of another legal entity that most significantly impact
the legal entity’s economic performance according to the provisions of the Variable Interest Entities Subsections
of Subtopic 810-10.
A legal entity may have multiple decision makers, examples of which include
equity owners, asset managers, servicers of asset backed securitizations, real
estate property managers, hotel operators, oil and gas plant operators, and utility
plant operators.
Until the FASB issued ASU 2015-02, the concept of a “decision maker” was never
formally defined. Many of ASU 2015-02’s amendments
to ASC 810-10 focus on the evaluation of whether a
reporting entity has the first characteristic of a
controlling financial interest in a VIE (i.e., the
power to direct the activities that most
significantly affect the VIE’s economic
performance). Paragraph BC76 of ASU 2015-02 states
that if the criteria in ASC 810-10-55-37 are met,
the decision maker is deemed to be acting as a
fiduciary on behalf of the legal entity and its
variable interest holders. Fees paid to such a
decision maker would therefore not represent a
variable interest in the legal entity, and the
decision maker would not need to continue with its
consolidation assessment of the legal entity.
Conversely, if a decision maker does not meet all
of the criteria in ASC 810-10-55-37, the fees paid
to the decision maker would be considered a
variable interest and further consideration under
the VIE model would be required. See Section
4.4 for a detailed discussion of
whether fees paid to an entity’s decision maker
are considered a variable interest.