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Comment: Consolidation NFP

We have submitted the attached comment letter to the FASB in response to its proposed ASU Not-for-Profit Entities – Consolidation (Subtopic 958-810): Clarifying When a Not-for-Profit Entity That Is a General Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity.

We broadly support the ASU’s proposed retention of the guidance regarding when general partners would consolidate limited partnerships for NFP entities, which, without the ASU, would have been eliminated from US GAAP by ASU 2015-02. We did, however, encourage the Board to consider the following:

  1. Clarifying the language that scopes NFP entities out of the VIE subsections of ASC 810-10 to make it clear that (a) an NFP should not be analyzed by another reporting entity for consolidation pursuant to the VIE subsections, and (b) neither should an NFP analyze another entity for consolidation pursuant to the VIE subsections.
  2. Clarifying the guidance included in this ASU that seems to allow an NFP to elect the fair value option on its general and limited partnership interests (and thereby avoid consolidation analysis) provided that all such investments are treated similarly.