FASB ISSUES PRIVATE COMPANY COUNCIL PROPOSAL ON CONSOLIDATION OF VARIABLE INTEREST ENTITIESNorwalk, 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 email@example.com, referencing File Reference No. PCC-13-02, by October 14, 2013. Written comments should be addressed to:
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 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 www.fasb.org.