The Financial Accounting Standards Board is developing guidelines which may make it less likely that CDOs will have to be consolidated onto an institution's balance sheet. The rule change will apply to the so-called FIN 46 accounting rule.
Ann McIntosh, project manager, said the new guidelines, which center on paragraph 8c of FIN 46, address the fees of the structures and the determination of the primary decision maker. If service providers can demonstrate the relationship between the firm and the structure is more characteristic of that of an employee than of a controlling entity they may not have to consolidate under this paragraph, she said.
