PwC responds to FASB’s proposed changes to consolidation rules

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Comment letter , PwC US Sep 05, 2017

We support FASB’s proposed amendments to consolidation rules, but recommend Board reconsider certain aspects.


In June, the FASB proposed targeted improvements to the related party consolidation guidance for VIEs in ASC 810. As indicated in its September 5th response letter, PwC supports the proposed ASU, subject to the Board re-visiting its proposed changes to the “related-party tie-breaker” guidance. PwC believes the proposed guidance will prove difficult to apply consistently in practice, potentially leading to undue diversity in VIE consolidation conclusions. In its letter, PwC has outlined two alternative approaches to the proposed “tie-breaker” test for the Board’s consideration.

The proposal’s other significant change is intended to provide consolidation relief to private companies that have interests in companies that are under common control. In lieu of performing a VIE consolidation analysis, the proposal would allow a private company to provide additional disclosures about its interests in a private company common control party. This alternative approach would be optional but, once elected, would be required to be applied to all common control parties going forward. 

An effective date for a final standard has yet to be determined.

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Heather Horn

Heather Horn

US Strategic Thought Leader, National Professional Services Group, PwC US

David Schmid

David Schmid

International Accounting Leader, National Professional Services Group, PwC US

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