United States

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.

Read KPMG Comment Letter

Read Proposed FASB ASU