FASB, Financial Accounting Standards Board.

Consolidation: Policy and Procedures

Last updated on May 15, 2013. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(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 the 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 consider comprehensive guidance for consolidation of all entities, including entities controlled by voting or similar interests. This includes an evaluation of guidance for determining the capacity of a decision maker.

Due Process Documents

On November 3, 2011, the Board issued proposed Accounting Standards Update, Consolidation (Topic 810): Principal versus Agent Analysis, for public comment.  The comment period ended on February 15, 2012.

• Download the proposed Accounting Standards Update on Consolidation 
• Read the news release introducing the proposed Update
• Read the FASB in Focus that summarizes the proposed Update
• Read comment letters received on the proposed Update
• Read the comment letter summary

Decisions Reached at the Last Meeting (November 6, 2012)

In its Exposure Draft, the Board proposed an analysis for both variable interest entities (VIEs) and voting partnerships and other similar entities (partnerships) for purposes of determining whether a decision maker is acting in a principal or agent capacity. That analysis contains both power and economic elements. The proposed requirements differed for partnerships (and similar entities) and VIEs. A general partner acting as a principal was automatically considered as holding a controlling financial interest requiring consolidation of the other entity. A principal in a VIE was not automatically deemed the holder of controlling financial interest (primary beneficiary) of the VIE.

In this meeting, the Board decided to align the principal versus agent analysis for VIEs and partnerships by requiring that a decision maker that is determined to be the principal of a VIE to be automatically considered to be the primary beneficiary of the VIE.

Please see the Board meeting minutes from the November 6, 2012, meeting below for more information.

Summary of Decisions Reached to Date

Next Steps

The Board is currently in the process of redeliberations and will continue to consider feedback received on its proposed Update.

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.

Background Information

The Board’s technical agenda previously included a long-term project to develop comprehensive guidance on accounting for affiliations between entities, including reconsideration of ARB No. 51, Consolidated Financial Statements. The IASB also had an active project on its agenda to reconsider its guidance in this area. In 2004, the IASB and the FASB agreed that an objective of both their projects was to develop a common, high-quality standard on consolidation policy. In June 2009, the Board issued FASB Statement No. 167, Amendments to Interpretation No. 46(R) to improve financial reporting by enterprises involved with variable interest entities. On May 12, 2011 the IASB issued IFRS 10 Consolidated Financial Statements.

Contact Information