Accounting developments for special purpose entities

Download

The IASB (the International Accounting Standards Board) issued various new standards in May 2011, two of which are of particular relevance to those involved in securitisation and structured finance.

IFRS 10 (Consolidated Financial Statements) introduces new rules which will impact which party, if any, consolidates a special purpose entity (SPE) created as part of a structured finance transaction.

IFRS 12 (Disclosure of Interests in Other Entities) is designed to enhance the financial statement disclosures that banks and other parties make concerning their involvement in other entities, particularly unconsolidated SPEs. It is uncertain at this stage how some of the provisions of IFRS 10 will be interpreted, but we provide below some first impressions of the potential impact of the two new standards on those involved in structured finance.