The Financial Accounting Standards Board has decided to go ahead with a proposed deferral for certain elements of its new consolidation requirements. The final Accounting Standards Update is being drafted by FASB staff and is expected to be published in mid-February.

At a regular weekly meeting, the Board reviewed comments to its proposed update, Consolidation (Topic 810): Amendments to Statement 167 for Certain Investment Fund, which would defer the effective date of FAS 167. That’s the accounting standard FASB adopted along with FAS 166: Accounting for Transfers of Financial Assets in the wake of financial crisis to bring more off-balance-sheet activity on to corporate balance sheets. (Both are now found in the Accounting Standards Codification under Topic 860 Transfers and Servicing and Topic 810 Consolidation.)

The one-year deferral is being granted for interests in entities that have all the attributes of an investment company as specified under existing guidance under Topic 946 in the Codification and where it is industry practice to apply the financial reporting measurement principles found in the same guidance.

FASB expects the deferral to apply most significantly to those in the investment management industry, but it is not intended to apply for interests in securitization entities, asset-backed financing entities, or entities that formerly considered “qualifying” special purpose entities. The Board plans to provide details in the final Update on what qualifies for the deferral and what does not.

FASB agreed to consider the deferral in the interest of convergence with international accounting rules. The International Accounting Standards Board is working on a similar project to bring more off-balance-sheet instruments on to corporate balance sheets, but it was reaching some different conclusions about how to address funds directed by investment managers. FASB agreed to set the requirements aside for now for those funds while the two boards work on a more comprehensive solution for both U.S. and international rules.