Accounting & Auditing
New Off-Balance Sheet Rules Not Just for Banks
By Tammy Whitehouse balance sheet treatment of the pooling The big change for banks is an end to
and trading of financial assets—Finan- the exception that has long existed for
C ompanies outside the financial ser-
vices industry may want to pay
heed to new securitization rules that,
cial Accounting Standard No. 166, Ac-
counting for Transfers of Financial As-
sets, and FAS 167, Amendments to FASB
“qualifying special purpose entities,” a
type of entity where banks have done
much of their off-balance sheet dealing
under the surface, extend far beyond Interpretation No. 46(R). (They now are in loans and other types of assets. Un-
bank balance sheets. contained in the Accounting Standards der the new rules, banks can no longer
The Financial Accounting Standards Codification under Sections 810 Con- engineer transactions that look like the
Board adopted two new accounting solidation and 860 Transfers & Servic-
standards in June designed to curb off- ing.) Continued on Page 77
FUTURE IMPACT
The following excerpt is from SAB74: “Disclosure of the Impact That Recently restated in the future as a result of the change. The staff believes that
Issued Accounting Standards Will Have on the Financial Statements of The recently issued accounting standards may constitute material matters and,
Registrant When Adopted in a Future Period.” therefore, disclosure in the financial statements should also be considered
in situations where the change to the new accounting standard will be ac-
FACTS: An accounting standard has been issued that does not require adop- counted for in financial statements of future periods, prospectively or with
tion until some future date. A registrant is required to include financial state- a cumulative catch-up adjustment.
ments in filings with the Commission after the issuance of the standard but
before it is adopted by the registrant. QUESTION 2: Does the staff have a view on the types of disclosure that would
be meaningful and appropriate when a new accounting standard has been
QUESTION 1: Does the staff believe that these filings should include disclo- issued but not yet adopted by the registrant?
sure of the impact that the recently issued accounting standard will have on
the financial position and results of operations of the registrant when such INTERPRETIVE RESPONSE: The staff believes that the registrant should evalu-
standard is adopted in a future period? ate each new accounting standard to determine the appropriate disclosure
and recognizes that the level of information available to the registrant will
INTERPRETIVE RESPONSE: Yes. The Commission addressed a similar is- differ with respect to various standards and from one registrant to another.
sue with respect to SFAS No. 52 and concluded that The Commission also The objectives of the disclosure should be to (1) notify the reader of the dis-
believes that registrants that have not yet adopted SFAS No. 52 should closure documents that a standard has been issued which the registrant will
discuss the potential effects of adoption in registration statements and be required to adopt in the future and (2) assist the reader in assessing the
reports filed with the Commission. The staff believes that this disclosure significance of the impact that the standard will have on the financial state-
guidance applies to all accounting standards which have been issued but ments of the registrant when adopted. The