NEWS RELEASE 10/21/11

FASB Seeks Comments on Proposal to Clarify Criteria for Investment Company Accounting

Norwalk, CT, October 21, 2011—The Financial Accounting Standards Board (FASB) today issued a proposed Accounting Standards Update intended to improve and converge financial reporting by setting forth consistent criteria for determining whether an entity is an investment company. Comments on the proposed Update are requested by January 5, 2012.

This proposed Update is a result of the efforts of the FASB and the International Accounting Standards Board (IASB) to develop consistent criteria for determining whether an entity is an investment company. Under longstanding U.S. generally accepted accounting principles (GAAP), investment companies carry all of their investments at fair value, even if they hold a controlling interest in another company. The primary changes being proposed by the FASB relate to which entities would be considered investment companies as well as certain disclosure and presentation requirements. These changes are being proposed for the first time under International Financial Reporting Standards (IFRS). Therefore, the proposed Update would improve the comparability between entities that meet the criteria to be investment companies under U.S. GAAP and those that meet the criteria to be investment entities under the proposed amendments to IFRS.

In addition to the changes to the criteria for determining whether an entity is an investment company, the FASB also proposes that an investment company consolidate another investment company if it holds a controlling financial interest in the entity.

The IASB issued its proposal, Investment Entities, on August 25, 2011. Comments on the IASB’s Exposure Draft are also requested by January 5, 2012.

The proposed Update is available at www.fasb.org.


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.