NEWS RELEASE 10/21/11
FASB Seeks Comments on Proposal to Clarify Criteria for Investment Company
AccountingNorwalk, CT, October 21, 2011—The Financial
Accounting Standards Board (FASB) today issued a proposed Accounting Standards
Update intended to improve and converge financial reporting by setting forth
consistent criteria for determining whether an entity is an investment company.
Comments on the proposed Update are requested by January 5, 2012.
proposed Update is a result of the efforts of the FASB and the International
Accounting Standards Board (IASB) to develop consistent criteria for determining
whether an entity is an investment company. Under longstanding U.S. generally
accepted accounting principles (GAAP), investment companies carry all of their
investments at fair value, even if they hold a controlling interest in another
company. The primary changes being proposed by the FASB relate to which entities
would be considered investment companies as well as certain disclosure and
presentation requirements. These changes are being proposed for the first time
under International Financial Reporting Standards (IFRS). Therefore, the
proposed Update would improve the comparability between entities that meet the
criteria to be investment companies under U.S. GAAP and those that meet the
criteria to be investment entities under the proposed amendments to IFRS.
In addition to the changes to the criteria for determining whether an
entity is an investment company, the FASB also proposes that an investment
company consolidate another investment company if it holds a controlling
financial interest in the entity.
The IASB issued its proposal,
Investment Entities, on August 25, 2011. Comments on the IASB´s
Exposure Draft are also requested by January 5, 2012.
The proposed Update
is available at www.fasb.org.
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 www.fasb.org.