Consolidating special purposes entities

Current accounting standards require an enterprise to include subsidiaries in which it has a controlling financial interest in its consolidated financial statements.

That requirement usually has been applied to subsidiaries in which an enterprise has a majority voting interest but, in many circumstances, the enterprise’s consolidated financial statements do not include SPEs with which it has fundamentally similar relationships.

Companies with SPEs that existed prior to issuance of the Interpretation would be required to apply the guidance to the existing SPEs at the beginning of the first fiscal period after March 15, 2003.

Calendar year-end companies would need to apply the guidance on April 1, 2003.

Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors and others rely on credible, transparent and comparable financial information.

Norwalk, CT, July 1, 2002—The Financial Accounting Standards Board (FASB) has approved for issuance an Exposure Draft of a proposed Interpretation that establishes accounting guidance for consolidation of special-purpose entities (SPEs).

The proposed Interpretation, , will apply to any business enterprise—both public and private companies—that has an ownership interest, contractual relationship or other business relationship with an SPE.

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