FAS167 is a new FASB ruling attempting to tease out disclosure on what's called "variable interest entities". It forces consolidation of entities controlled by a corporation. The goal of the ruling was to force banks to disclose their CP conduits holdings, which were generally off-balance sheet. Banks would set up a company and give full ownership to a charity. Then they would have the company set up a commercial paper program which the bank would guarantee. The company would issue commercial paper to finance purchases of various assets, often structured credit tranches. The guarantee required far less regulatory capital than holding the assets directly on the balance sheet.
But this was a failure of regulatory capital rules rather than accounting rules. The 167 approach of "consolidate first, ask questions later" will have some bizarre unintended consequences that will cause more confusion and less transparency. It will force balance sheets to balloon, mixing assets that pose risk to the firm with those that do not. Analysts and rating agencies will end up paying less attention to balance sheet disclosures, as the salad of balance sheet items for complex institutions will become far more difficult to sort out.
As an example, consider asset management firms. A large firm may manage multiple funds with various product mixes. 167 will force the firm to consolidate the fund holdings because the firm controls these funds. Imagine a firm that normally has a $50 million dollar balance sheet forced to consolidate it's funds, creating a multi-billion dollar balance sheet. And if the funds have control of the portfolio companies, those will get consolidated as well. Let's say a portfolio company owns a tour boat - that boat will now show up as an asset of the management company. An analyst will have a real tough time figuring out what a fund management company is doing with a tour boat. And those who invest in the management company (but not in it's funds) will get far less useful information from the bloated financials. This is an example of FASB, zealous regulators, and accounting firms (who love the extra business) actually reducing transparency.