Thursday, November 12, 2009

Asset managers get reprieve from FAS167

As we discussed earlier, FAS 167 would become a nightmare for asset managers. Instead of providing more transparency, the FAS167 reporting would actually end up with less.

E&Y: As written, Statement 167 may result in asset managers consolidating many hedge funds, private equity funds and other investment funds that they manage. Some financial statement preparers and users have indicated that consolidation of funds by asset managers will result in less meaningful financial statements

FASB recently decided to defer hitting asset managers with 167 until these consolidation issues are addressed.

E&Y: At the 11 November meeting, the FASB voted to expose for comment an amendment that would defer the application of Statement 167 for a limited number of entities (principally mutual funds, private equity funds and hedge funds) until the completion of the joint FASB/IASB project on consolidation accounting.

It's good to know that when it comes to the post-crisis regulation (including accounting/transparency regulation)at least some folks are being rational about it.

Update: Looks like CLO/CDO managers are not on the list of entities that would get the FAS167 deferral. That means they would need to consolidate billions in CLOs they manage onto their management company financials.

FAS167 for Asset Managers