NEWS RELEASE 06/23/06
FASB Seeks Constituent Views on Proposal to Further Clarify the Definition of a Public Entity
Norwalk, CT, June 23, 2006—On June 15, 2006 the FASB issued a proposed staff position (FSP) that defines an obligor (or debtor) of a conduit municipal bond traded on a public exchange, or market, as a public entity.
A conduit municipal bond is an offering by a governmental entity that is not for its own use, but for the use of a private party (conduit bond obligor). The types of private entities that can be involved in conduit municipal bond transactions are limited to certain not-for-profit entities including hospitals, museums, and libraries, etc., as well as certain for-profit entities for whom the debt is issued in the form of an industrial revenue or development bond. In some instances, conduit municipal bonds are traded on a domestic or foreign stock exchange or on public or over-the-counter markets.
Accordingly, the proposal addresses constituent questions that have arisen concerning whether a conduit bond obligor with publicly traded conduit debt securities should be considered a public entity and apply certain existing authoritative accounting literature.
The proposed FSP would amend APB Opinion No. 28, Interim Financial Reporting, FASB Statements No. 69, Disclosures about Oil and Gas Producing Activities, No. 109, Accounting for Income Taxes, No. 126, Exemption from Certain Required Disclosures about Financial Instruments for Certain Nonpublic Entities, No. 131, Disclosures about Segments of an Enterprise and Related Information, and No. 141, Business Combinations.
The FASB invites individuals and organizations to send written comments on all matters in this proposed FSP. The comment deadline for today’s proposal is July 31.
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.