A PDF of the below Comment Letter can be downloaded here »
Mr. Jackson M. Day
Technical Director
Financial Accounting Standards Board
801 Main Avenue, PO Box 5116
Norwalk, CT 06856-5116
Re: File Reference No. 2024-ED500
Dear Mr. Day,
This letter is submitted by Financial Executives International’s (FEI) Committee on Corporate Reporting (CCR) in response to the Financial Accounting Standards Board’s (FASB or Board) Proposed Accounting Standards Update—Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (Exposure Draft or proposed Update).
FEI is a leading international organization comprised of members who hold positions as Chief Financial Officers, Chief Accounting Officers, Controllers, Treasurers, and Tax Executives at companies in every major industry. CCR is FEI’s technical committee of approximately 50 Chief Accounting Officers and Corporate Controllers from Fortune 100 and other large public companies, representing more than $16 trillion in market capitalization. CCR reviews and responds to pronouncements, proposed rules and regulations, pending legislation, and other documents issued by domestic and international regulators and organizations such as the U.S. SEC, PCAOB, FASB, and IASB. This letter represents the views of CCR and not necessarily the views of FEI or its members individually.
First, we commend the Board for its decision to reconstitute the Emerging Issues Task Force (EITF). We believe the reconstituted EITF will enhance financial reporting by enabling the timely identification and development of proposed solutions to address narrowly scoped financial accounting issues.
Next, although the majority of CCR companies generally do not expect to be directly impacted by the Board’s proposed Update, we support the proposed amendments that would require an entity involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a variable interest entity (VIE) that meets the definition of a business to assess the factors in paragraphs 805-10-55-12 through 55-15 to determine which entity is the accounting acquirer. We believe requiring entities with this fact pattern to consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions will enhance comparability of financial statements across entities engaging in acquisition transactions.
We appreciate this opportunity to provide feedback on the proposed Update related to determining the accounting acquirer in the acquisition of a VIE. We thank the Board for its consideration of our comments and welcome further discussion with the Board or staff at your convenience.
Sincerely,
Alice L. Jolla
Chair, Committee on Corporate Reporting
Financial Executives International