Joint IASB / FASB October 2009

The FASB has recently amended its requirements in relation to identifying when entities known as variable interest entities should be consolidated. Variable interest entities include the type of structure such as structured investment vehicles that attracted attention as the global financial crisis developed.

The IASB is deliberating its proposals to revise its requirements for identifying when entities should be consolidated. The IASB's proposals would apply to entities that would be variable interest entities under U.S. GAAP. However, the IASB's proposals are broader and would also apply to those entities that are normally controlled by way of voting rights. At this meeting:

• The boards concluded that the objectives for assessing control of structures that would be classified as variable interest entities under the recent amendments to U.S. GAAP on consolidation and in the proposed IASB model are fundamentally the same.
• The boards identified some differences in the application of those principles and agreed to conduct their respective projects on consolidation jointly and deliberate issues relating to the consolidation guidance at monthly joint meetings.
• The IASB agreed to amend its project timetable to give both boards the opportunity to deliberate the consolidation requirements, with the goal that the FASB would publish an exposure draft that is consistent with the consolidation standard issued by the IASB. The boards think that this approach increases the likelihood that the FASB and the IASB consolidation requirements will result in a converged solution.
• The FASB expects to be in a position to publish an exposure draft at the beginning of the second quarter of 2010. The IASB has tentatively decided that it should publish its final standard after it has considered, with the FASB, comment letters the FASB receives on its proposals.