IASB Proposes to Exempt Investment Entities From Consolidation Requirements

The International Accounting Standards Board (IASB) published proposals Thursday to define investment entities as a separate type of entity that would be exempt from the accounting requirements in IFRS 10, Consolidated Financial Statements.

Investment entities are commonly understood to be entities that pool investments from a wide range of investors for investment purposes only. Currently, IFRS 10 would require consolidation if an investment entity controls an entity in which it is investing.

However, when developing IFRS 10, investors commented that this would not provide them with the information they need to assess the value of their investments, the IASB said in a press release. To address this issue, the exposure draft proposes criteria that would have to be met by an entity to qualify as an investment entity. These entities would be exempt from the consolidation requirements and instead would be required to account for all their investments at fair value through profit or loss. The ED also includes disclosure requirements about the nature and type of these investments.

This project is being undertaken jointly by the IASB and FASB. Both boards’ proposals are broadly aligned. However, FASB is considering proposing that the exemption would extend to cases in which the investment entity is owned by a larger group that is not itself an investment entity. The IASB said that FASB will publish its own ED later.

The ED is open for comment until Jan. 5, 2012. The IASB said FASB will align its comment period with the IASB’s to ensure joint re-deliberations. A podcast on these proposals and a high-level summary are available on the project page. If adopted, the proposals would be integrated into IFRS 10.

More from the JofA:

 Find us on Facebook  |   Follow us on Twitter  |   View JofA videos


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.