FASB published standards that change the way entities account for securitizations and special-purpose entities
8 Financial Engineering with Special-Purpose Entities
(SPEs) and Joint Ventures (JVs) -- Find out if companies are being set up to assist in product financing to customers of the parent and determine the effect on the parent if the entity fails.
Otherwise, application of Interpretation 46R (or Interpretation 46) is required in financial statements of public entities that have interests in structures that are commonly referred to as special-purpose entities
for periods ending after Dec.
The use of special-purpose entities
is becoming more widespread and the tax methodology of dealing with such entities is developing.
On Tuesday, June 15, James Fairrie, managing director of SPV Management Limited, will discuss the evolving responsibilities in the role, status and authority of directors and managers of special-purpose entities
in multi-jurisdictional structures.
In another action, the FASB issued an exposure draft titled Qualifying Special-Purpose Entities
and Isolation of Transferred Assets, which would amend FASB Statement No.
46, Consolidation of Variable Interest Entities, which applies to a broad array of such organizations including special-purpose entities
, off-balance-sheet structures and, generally, corporations, partnerships, trusts or any other business-oriented legal structures that either do not have equity investors with voting rights or have shareholders who provide financial resources insufficient to support the entity's activities.
On the technical front, he said the FASB has "significantly modified our agenda and priorities in direct response to issues that have come to light in the recent financial reporting scandals including accounting for special-purpose entities
(SPEs), guarantees, equity derivatives and obligations settleable in shares, energy trading contracts and the very broad area of revenue recognition.
Assess and strengthen expertise for complex business auditing - such as off-balance-sheet risks and special-purpose entities
FASB issued new rules addressing consolidation of variable interest entities, or VIEs (until now, better known as special-purpose entities
, or SPEs) and loan guarantees.
Of the 27 percent of respondents with debt not reflected on the balance sheet, 61 percent use special-purpose entities
to achieve that result.
The rating action follows Eiffel's lending of up to $50 million to two special-purpose entities
for the purchase of a pool of securities.