On March 13, 2013, the FASB met to discuss investment companies, a joint project with the IASB. The FASB discussed certain proposed disclosures designed to increase transparency into an investment company's interest in an investee fund. These investee fund disclosures have been the final area of focus as the FASB finalizes its standard on investment companies.
At its meeting, the FASB decided to remove the proposed disclosures from the current project and re-evaluate them at a later date. The FASB also agreed to move forward with issuing a final standard on investment companies.
The IASB issued its final standard in the form of amendments to existing IFRS standards on October 31, 2012. The amendments focused primarily on creating a narrow exception for certain entities from the consolidation guidance.
The FASB tentatively decided on a new, converged definition for investment companies several months ago. However, there were additional topics included in the FASB’s original proposal that it continued to deliberate, including consolidation requirements for investment companies with controlling interests in underlying investee funds. The IASB did not address this topic in its final standard.
During redeliberations, the FASB decided to eliminate these proposed requirements and instead retain existing guidance for consolidation of underlying investee funds. As an alternative, however, the FASB decided to require additional disclosures for investee funds that are determined to be significant to the investment company itself.
Decisions reached at March 13 meeting
Because these incremental disclosures were not included in the original exposure draft, the FASB directed its staff to perform targeted outreach to assist the FASB in determining whether the new disclosures should be exposed for public comment. Based on the feedback received, the FASB determined that the proposed disclosures should be removed from the existing investment companies project and re-evaluated at a later date as a stand-alone project.
The FASB plans to issue a final standard on investment companies in the near future, which will not include guidance on investee fund disclosures. It is expected that such disclosures will be revisited by the FASB as part of a stand-alone project. However, no timetable for this project has been provided.
The FASB decided at an earlier meeting that the final standard will be effective for an entity's interim and annual reporting periods in fiscal years beginning after December 15, 2013. Early adoption will be prohibited.
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1Refer to In brief 2012-49, IASB finalizes definition of an “investment entity”
2Refer to In brief 2012-12, FASB and IASB agree to principles-based definition for investment companies