FASB To Release Three New Exposure Drafts

by Glen Shapiro, LawAndTax-News.com, New York

04 September 2008

The Financial Accounting Standards Board (FASB) has announced that it expects to issue three separate but related Exposure Drafts on or around September 15, 2008, for public comment.

The exposure documents will address proposed amendments to: Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities; and FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities.

Also to be issued as an exposure document is a proposed FASB Staff Position No. 140-e and FIN 46 (R)-e on disclosures about Transfers of Financial Assets and Interests in Variable Interest Entities.

The proposal to amend Statement 140, would, among other things, remove the concept of a qualifying special-purpose entity (SPE) and would remove the exception from applying Interpretation 46(R) to qualifying special-purpose entities (SPEs).

The proposal to amend Interpretation 46(R) would amend the guidance for determining whether an enterprise must consolidate a SPE, including those previously considered qualifying SPEs.

In addition, both proposals would require additional enhanced disclosures.

The FASB Staff Position amends Statement 140 to require public entities to provide additional disclosures about transfers of financial assets and also amends Interpretation 46(R) to require public enterprises to provide additional disclosures about their involvement with variable interest entities. The purpose of this FASB Staff Position is to promptly improve disclosures by public entities and enterprises until the pending amendments to Statement 140 and Interpretation 46(R) are effective.

The FASB stated that it intends to issue more details about these changes, including those on how to submit comments on the proposals, in due course.

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