Deloitte notes from consolidation roundtable

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18 Sep 2008

On 17 September 2008, the IASB conducted a public roundtable on the issues in its current project on Consolidation.

The roundtable was conducted in two sessions. The IASB made available on its website two documents – a staff draft of an exposure draft and discussion notes raising 15 questions to which roundtable participants were invited to respond. We have posted the preliminary and unofficial Notes Taken by Deloitte Observers at the Roundtable (PDF 37k). The notes include links to download the two documents from the IASB's website. The 15 questions were as follows:
  1. Do you think that the revised control definition could be applied to traditional control arrangements and those entities set up with a narrow and well-defined purpose? If not, where do you think the definition falls down?
  2. Is the general control principle likely to lead to the right entities being consolidated?
  3. Do you agree that the continuous assessment of control should not lead to entities 'flipping in and out' of consolidation?
  4. Do you agree with the presumption that the greater the variability of returns that a party exposes themselves to the greater the expected ability of that party to affect the performance of the assets of that entity? if not, why not?
  5. We envisage that there will be some circumstances when an entity is not controlled by any party. Do you agree? If not, why not?
  6. Do you agree that a party can have control over an entity even if they hold less than half the voting rights? If not, why not?
  7. Are the indicators provided in the draft ED sufficient to capture the entities that should be consolidated and to ensure consistent application?
  8. Do you agree that the existence of an option on its own is not enough to give a party control over an entity? If not, why not?
  9. Do you agree that the definition of significant involvement will capture the right entities about which you want further information or do you think it is casting too wide a net? What entities are being captured that you believe should not be, and vice versa?
  10. Do you support a requirement to disclose additional information in those circumstances in which the consolidation decision was not straight-forward?
  11. Do you support the proposal to require the disclosure of more information about the claims of non-controlling interests?
  12. Do you support the suggested disclosures in relation to significant involvement?
  13. Would you, as a preparer of financial statements, be able to produce the additional information required to be disclosed under the draft ED?
  14. Do you agree that where a fund manager has dual role – it acts in a fiduciary capacity and hold a direct investment in the investee – the fund manager should consider the two positions collectively when determining whether it has control? If not, why not? Please provide examples for which you believe that in spite of the dual role performed by the fund manager you believe it is appropriate for the fund manager not to consolidate the entity.
  15. Do you agree that investment companies should be required to consolidate any entities it controls? If not, why no


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