more-arw search

IASB Guideline for Investment Reporting Forthcoming

The International Accounting Standards Board is getting ready to release its f

The International Accounting Standards Board is gearing up to release a new guideline that will clarify the definition of "investment entities," which could change the way some organizations invest in associates, joint ventures and subsidiaries. As of the group's most recent meeting, a final draft was still being composed.

Under International Financial Reporting Standards, venture capital groups, hedge funds and other organizations are required to consolidate their reports when it comes to investing in subsidiaries, The Hindu Business Line reported. For joint ventures and subsidiaries, however, investors can apply fair value accounting using a profit/loss model. The IASB guideline will address complaints that say that all investments should be measured using the fair value profit/loss approach.

The proposed guideline has been up for discussion for roughly one year, and comments on an exposure draft were collected by the IASB in early 2012. In June, the board released a tentative list of decisions, including that subsidiary investments should be reported at fair value. The IASB also said investment entities will not be required to attach the financial statements of their investees, and that "a non-investment entity parent should not retain the exception from consolidation used for the controlled investees of an investment entity subsidiary," according to the Cayman Financial Review.