Post by Sapphire Capital on Aug 3, 2008 2:49:11 GMT 4
FASB Delays QSPE Elimination
By Ed Zwirn
August 1, 2008
Bowing to pressure from financial companies and industry groups, the Financial Accounting Standards Board has decided to delay by one year the proposed effectiveness of standards revisions intended to eliminate qualified special purpose entities, legally separate banking bodies with separate books created by investment banks.
According to the latest FASB decision, the board is now targeting rewrites of FAS 140 and INT 46 (R) to be effective for all publicly traded companies with fiscal years beginning after Nov. 15, 2009.
But financial statements users will at least get to know about QSPEs sooner than that as disclosures are being split off into a separate staff position, which will become effective “as soon as possible but no later than the first interim reporting period in 2009.”
The board originally intended for the rewrites to be effective Nov. 15, but members agreed that with an exposure draft likely to be out in August followed by a 60-day public comment period, the deadline would be impractical from a compliance perspective.
FASB Chairman Robert Herz was probably the most reluctant to go along with the delay, which was approved unanimously Wednesday. Herz said he was “chagrined by what [the board had] discussed” and argued that abuses of current rules made the changes necessary.
“The kind of reporting that was made by a number of preparers did not live up to the needs and desires of the investment community,” he said, referring to the examinations he and other board members had made of company filings as part of the project.
“The notion of a QSPE was stretched beyond recognition in a number of instances. It's very disappointing because the system can do better than that,” he added.
The American Securitization Forum and the Securities Industry and Financial Markets Association wrote FASB and called for the delay last week.
Arguing that the FASB rewrite would be “likely to swell the balance sheets of the affected entities, impairing financial ratios and financial covenant performance and regulatory capital tests,” the two groups called for a “more measured and realistic but still aggressive deadline (such as Jan. 1, 2010).”
“We do not believe that a year-end 2008 deadline is a necessary response to current market conditions,” stated the letter co-signed by ASF Executive Director George Miller and SIFMA Executive Vice President Randy Snook. “The risks of too much haste are high.”
By Ed Zwirn
August 1, 2008
Bowing to pressure from financial companies and industry groups, the Financial Accounting Standards Board has decided to delay by one year the proposed effectiveness of standards revisions intended to eliminate qualified special purpose entities, legally separate banking bodies with separate books created by investment banks.
According to the latest FASB decision, the board is now targeting rewrites of FAS 140 and INT 46 (R) to be effective for all publicly traded companies with fiscal years beginning after Nov. 15, 2009.
But financial statements users will at least get to know about QSPEs sooner than that as disclosures are being split off into a separate staff position, which will become effective “as soon as possible but no later than the first interim reporting period in 2009.”
The board originally intended for the rewrites to be effective Nov. 15, but members agreed that with an exposure draft likely to be out in August followed by a 60-day public comment period, the deadline would be impractical from a compliance perspective.
FASB Chairman Robert Herz was probably the most reluctant to go along with the delay, which was approved unanimously Wednesday. Herz said he was “chagrined by what [the board had] discussed” and argued that abuses of current rules made the changes necessary.
“The kind of reporting that was made by a number of preparers did not live up to the needs and desires of the investment community,” he said, referring to the examinations he and other board members had made of company filings as part of the project.
“The notion of a QSPE was stretched beyond recognition in a number of instances. It's very disappointing because the system can do better than that,” he added.
The American Securitization Forum and the Securities Industry and Financial Markets Association wrote FASB and called for the delay last week.
Arguing that the FASB rewrite would be “likely to swell the balance sheets of the affected entities, impairing financial ratios and financial covenant performance and regulatory capital tests,” the two groups called for a “more measured and realistic but still aggressive deadline (such as Jan. 1, 2010).”
“We do not believe that a year-end 2008 deadline is a necessary response to current market conditions,” stated the letter co-signed by ASF Executive Director George Miller and SIFMA Executive Vice President Randy Snook. “The risks of too much haste are high.”