In this week, dedicated to consolidated financial statements and the impact of international financial reporting standards, this was the underpinning for a number of lessons about implications of the new standard, and how companies can deal with it, if and when it comes.
partly aims to define the often slippery status of Special Purpose Entities, Variable Interest Entities, and other such activities. It was completed by IASB on May 12, in effect requiring multinationals to adopt it by 2013 -- and allowing for earlier application. But the standard may impact companies other than multinationals. Assuming, that is, that the Securities and Exchange Commission decides to mandate the use of international standards, in a ruling that is expected later this year.
If that happens, companies that once were concerned only with U.S. GAAP may have homework to do -- particularly real estate and investment management companies. In the U.S, these have "been living under deferrals allowed by FAS 167," according to Dave Augustine, a partner in KPMG's advisory services group. And they may in any case soon have to live up to more rigorous standards, when FASB revises the standard later this year, as is expected.
For one thing, the set of tests that a CFO has to perform -- to decide whether consolidation is necessary -- seems more complicated and subjective than the standards, both U.S. and international, that preceded it.