FASB Publishes Proposed Staff Position to Defer Date of FIN46
The Financial Accounting Standards Board (FASB) this week published a proposed staff position, FIN 46-e, that will defer the effective date of FASB Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, for a public entity. A public entity need not apply the provisions of Interpretation 46 until the end of the first interim or annual period ending after December 15, 2003 (as of December 31, 2003, for an entity with calendar year-end quarters), if all of the following conditions are met:
FASB says nonfinancial assets are assets other than financial assets as defined in paragraph 364 of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. Financial assets are cash, evidence of an ownership interest in an entity, or a contract that conveys to a second entity a contractual right (a) to receive cash or another financial instrument from a first entity or (b) to exchange other financial instruments on potentially favorable terms with the first entity.
In an attempt to respond to off-balance sheet financing transactions, FIN 46 was intended to address only special purpose entities, but its final provisions are much broader and have significant consequences to the low-income housing tax credit (LIHTC) industry. The board met last week to consider modifying to clarify certain provisions of FIN 46.