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09/05/08 -- FASB to Issue Proposed Guidance on Derecognition of Financial Assets in Mid-September
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The Financial Accounting Standards Board (FASB) will release three exposure drafts addressing the accounting for asset securitization on or around September 15, 2008.
The draft guidance will address proposed amendments to Statement of Financial Accounting Standards (SFAS) No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and FASB Interpretation (FIN) No. 46(R), Consolidation of Variable Interest Entities.
The Board will also release an exposure draft of a proposed FASB Staff Position (FSP) No. 140-e and FIN 46(R)-e, Disclosures about Transfers of Financial Assets and Interests in Variable Interest Entities.
The proposed amendment to SFAS No. 140 would remove the concept of a qualifying special-purpose entity (QSPE), or off-balance sheet vehicle, from the statement, as well as the exception from applying FIN No. 46(R) to a QSPE. If approved, the revision to FIN No. 46(R) would amend the guidance for determining whether an enterprise must consolidate a SPE, including those previously considered qualifying SPEs. Both proposed Statements would also require additional enhanced disclosures.
Proposed FSP No. 140-e and FIN 46(R)-e would amend SFAS No. 140 to require public entities to provide additional disclosures about transfers of financial assets. It would also amend FIN No. 46(R) to require public companies to provide additional disclosures about their involvement with variable interest entities.
The purpose of the FSP, according to the FASB, is to promptly improve disclosures by public companies until the pending amendments to SFAS No.140 and FIN No. 46(R) are effective.
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