Project Update

Consolidation Targeted Improvements to Related Party Guidance for Variable Interest Entities

Last updated on September 6, 2018.  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 and Background
Due Process Documents
*Decisions Reached at Last Meeting
*Tentative Board Decisions Reached to Date
Next Steps
*Board/Other Public Meeting Dates
*Contact Information
 

*Project Objective and Background

After the Board decided to add to its technical agenda a project on consolidation reorganization and targeted improvements at its November 2, 2016 Board meeting, the Board directed the staff to research issues related to applying the variable interest entity (VIE) model to entities under common control. The staff researched alternatives that would reduce the cost and complexity of applying the VIE related party guidance while maintaining useful information for users of financial statements.

At the March 8, 2017 Board meeting, the Board discussed research results and alternatives for addressing issues associated with the VIE related party guidance. The Board decided to add a project to its technical agenda separate from the project on consolidation reorganization and targeted improvements. The objective of the project is to make targeted improvements to the related party guidance for VIEs specific to the following items:
  1. Applying the VIE guidance to private companies under common control
  2. Considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests
  3. Applying certain requirements when power is shared among related parties or when, as a group, related parties under common control have a controlling financial interest in a VIE but none of the parties individually conclude that they have a controlling financial interest.
Based on the comment letter feedback in response to the proposed Accounting Standards Update, the project is now only focused on items (a) and (b) above.
 

Due Process Documents

On June 22, 2017, the FASB issued Proposed Accounting Standards Update, Consolidations (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The due date for comment letters ended on September 5, 2017.
  • Download the Proposed Accounting Standards Update, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities.
  • Read the FASB in Focus which summarizes the Proposed Accounting Standards Update.
  • Read the press release on the Proposed Accounting Standards Update.
  • Read the Comment Letters

*Decisions Reached at Last Meeting (September 5, 2018)

The Board discussed a scope clarification to the private company accounting alternative, which will be included as part of the forthcoming final Accounting Standards Update, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities.
 
The Board decided that a private company reporting entity cannot apply the private company accounting alternative to a legal entity in which it has a direct or indirect controlling financial interest when considering the General Subsections of Topic 810 (and not the Variable Interest Entities Subsections of Topic 810).
 

*Tentative Board Decisions Reached to Date (September 5, 2018)

A summary of decisions reached to date can be found here.
 

Next Steps

The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.
 

*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.
 
September 5, 2018* Board Meeting—The Board discussed its intent related to the scope of the private company accounting alternative and directed the staff to continue drafting a final Accounting Standards Update for vote by written ballot.
June 6, 2018 Board Meeting—The Board discussed its previous decisions regarding effective date and transition requirements for private companies and directed the staff to continue drafting a final Accounting Standards Update for vote by written ballot.
May 16, 2018 Board Meeting—The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.
May 18, 2017 Board Meeting—The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot.

March 8, 2017
Board Meeting—The Board directed the staff to draft a proposed Accounting Standards Update for external review.
November 2, 2016 Board Meeting—The Board directed the staff to develop a staff draft of its tentative decision on the reorganization and considerations of simplifying the related party guidance for discussion at a public roundtable meeting.
February 3, 2016 Board Meeting—The Board discussed adding a project on consolidation to the research agenda.

*Contact Information

Chris Roberge
Senior Project Manager
ceroberge@fasb.org

Michael Cheng
Supervising Project Manager
mkcheng@fasb.org

Cole Moffat
Postgraduate Technical Assistant
cmoffat@fasb.org