Project Update

Investment Companies: Disclosures about Investments in Another Investment Company

Last updated on August 13, 2015. Projet removed from technical agenda.

(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

Project Objective
*Due Process Documents
*Decisions Reached at Last Meeting
*Summary of Decisions Reached to Date
*Next Steps
Board/Other Public Meeting Dates
Background Information
Contact Information

Project Objective

The objective of this project is to require disclosures in an investment company’s financial statements that will provide transparency into the risks, returns, and expenses of an investee that is also an investment company.

*Due Process Documents

On December 4, 2014, the Board issued an Exposure Draft of the proposed Accounting Standards Update, Financial Services—Investment Companies (Topic 946): Disclosures about Investments in Other Investment Companies, The comment deadline was February 17, 2015.

Download the Exposure Draft of the proposed Accounting Standards Update.

Decisions Reached at Last Meeting (August 5, 2015)

The Board concluded that the benefits of the information resulting from the proposed disclosures would not justify the costs of preparing and providing the information and decided to remove the project from its agenda. The Board decided to clarify, as part of its Technical Corrections and Improvement project, that the requirement to disclose investments held by investee funds applies only to nonregulated investment companies.

*Summary of Decisions Reached to Date (As of August 5, 2015)

See Decisions Reached at Last Meeting.

*Next Steps

The Board has decided to remove the project from the technical agenda.

*Board/Other Public Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

*August 5, 2015 Board Meeting—Decision to remove project from agenda
July 30, 2014 Board Meeting—Decision to issue a proposed Update.
April 4, 2014 Board Meeting—Decisions about the path forward in light of concerns raised by external reviewers.
October 23, 2013 Board Meeting —Decisions about scope, disclosure requirements, applicability to interim periods, and transition
March 13, 2013 Board Meeting—Decisions about the next steps.
Summary of Outreach
January 23, 2013 FASB Board Meeting—Decisions about the threshold and “as of” date for disclosures
August 29, 2012 Board Meeting—Decisions about disclosures requirements

Background Information

During its deliberations on the joint investment companies project, the Board became concerned about transparency into the risks of an investee fund to which the investors in the reporting investment company have economic exposure. As part of that joint project, in October 2011, the FASB issued proposed Accounting Standards Update, Financial Services—Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements. The Exposure Draft would have required an investment company to consolidate controlling financial interests in another investment company in a fund-of-funds structure.

Stakeholders strongly disagreed with the consolidation requirement in that Exposure Draft. Many of those constituents stated that the Board’s concerns regarding transparency could be addressed through disclosures about investee funds in the notes to the financial statements. Stakeholders also stated that disclosures about investments that are significant to the reporting investment company’s net assets and not just those investee funds that are controlled would provide more decision useful information for investors. In light of the feedback received, the Board decided to develop disclosures about investments in another investment company.

In April 2014, because of cost/benefit considerations the Board decided not to proceed with disclosures developed that would provide information about investments in another investment company. The Board, however, decided to proceed with its remaining decisions that would result in targeted improvements to investment company reporting.

Contact Information

Adriana Yepes
Project Manager

Amy Winkler
Postgraduate Technical Assistant