KPMG Comments on FASB Proposal to Clarify Consolidation Guidance for Certain Not-for-Profit Entities
Oct 03, 2016
From the Financial Reporting View
KPMG LLP recently commented on the proposed FASB ASU, Clarifying When a Not-for-Profit Entity That Is a General Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity, which would reestablish the presumption of control by not-for-profit entities (NFPs) that are general partners of for-profit limited partnerships and similar entities. An NFP general partner would consolidate its investment in a limited partnership unless the limited partners had substantive kick-out or participating rights.
KPMG believes that the proposal would clarify how a general partner should analyze these arrangements after adopting ASU 2015-02, Amendments to the Consolidation Analysis, and would minimize diversity in practice. In addition, KPMG supports the Board’s proposal to clarify that, after adopting ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, a not-for-profit entity in the scope of FASB ASC Topic 958 can continue to measure its controlling financial interests in limited partnerships and similar entities at fair value in some circumstances.