IASB Improves Accounting Requirements for Off-balance Sheet Activities
The International Accounting Standards Board (IASB) has completed its improvements to the accounting requirements for off balance sheet activities and joint arrangements by issuing International Financial Reporting Standard (IFRS) 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities.
The completion of this review brings the accounting treatment for off-balance sheet activities in IFRS and US generally accepted accounting principles (GAAP) broadly into alignment, and concludes an important element of the IASB’s comprehensive response to the financial crisis.
Sir David Tweedie, chairman of the IASB, said: “These improvements tighten up the reporting requirements for the consolidation of subsidiaries and special purpose vehicles, and require the substance of joint arrangements to be revealed. The comprehensive disclosure requirements will help investors to understand better risks associated with the creation or management of special purpose vehicles. As a package, these changes will provide a check on off-balance sheet activities and give investors a much clearer picture of the nature and extent of a company’s involvement with other entities.”