18 December 2008

IASB consultation on ED 10 on Consolidated Financial Statements

The IASB published for comment proposals to strengthen and improve the requirements for identifying which entities a company controls

The use of special structures by reporting entities, particularly banks, to manage securitisations and other more complex financial arrangements was highlighted by the FSF and the G20 as a matter of concern. Some commentators have questioned whether the current requirements lead to the right things being brought onto the balance sheet. They have been concerned that financial statements do not convey the extent to which reporting entities are exposed to risks from those types of structures.

The proposals present aprinciple-based definition of control of an entity that would apply to a wide range of situations and be more difficult to evade by special structuring. The proposals also include enhanced disclosure requirements that would enable an investor to assess the extent to which a reporting entity has been involved in setting up special structures and the risks to which these special structures expose the entity. The proposals would apply not only to the banking sector but to any entity that uses legal entities to manage its activities.

Deadline for comments is 20 March 2009.

Press release

ED 10

Basis for conclusions

Draft examples

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