The Financial Accounting Standards Board (FASB), at its June 11, 2008, weekly meeting, decided to remove a specified minimum third-party investment requirement that permits transferred financial assets to receive sale accounting treatment.

The Board?s decision will mean that no new requirement will be added to Statement of Financial Accounting Standards (SFAS) No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, to replace the elimination of qualified special purpose entities (QSPEs).

Under current rules, entities that do not qualify as QSPEs are subject to the consolidation rules found in FASB Interpretation (FIN) No. 46(R), Consolidation of Variable Interest Entities, which requires that a minimum of 10% of the beneficial interest be held by a party that is not consolidated by the transferor.

A majority of the Board agreed that there should not be a bright line minimum threshold in order for a transferor to get sale accounting, but they were still concerned about the removal of the requirement.