02-28-2008, 10:05 PM
<font color="navy"></font id="navy"><font size="6"></font id="size6"><font face="Georgia">Well Dear Kamran sb, It won't be appropriate if I mention specific names,but I can just give you some examples which based on my professional judgment needs to be consolidated. I agree with you that the guidance is subjective and every individual instance has to be evaluated.
There are entities which are operating for the benefits of reporting entity, it is evident from the transactions that the sole beneficiary from the transactions is the reporting entity.The reporting entity was able to govern operating and financial policies by means of agreements. The evidence was thatif we evaluate those transactions purely on the basis of prudence from the point of view of the subject entity, these wonât make much sense independently for the vehicle (the subject entity). Further, the agreements between the companies allow the reporting entity to obtain benefits from the subject entity. The subject entity was raising funds solely for financing the operations of the reporting entity.
"<b>Still, there are many local regulations and legal decisions which have to be followed and any SPE should have to be judged under the provisions of local regulations and laws governing it specifically</b>"
I believe that SIC 12 applies to activities irrespective of the fact whether they are conducted by a legal entity. The basic purpose of SIC 12 is to address perceived abuses involving SPEs.
regarding your comments on the consolidation of funs floated by Asset management companies, I've noticed that these funds are dislcosed in the financial statements, but not consolidated, based on the potential risks associated with them for the reporting entities.
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There are entities which are operating for the benefits of reporting entity, it is evident from the transactions that the sole beneficiary from the transactions is the reporting entity.The reporting entity was able to govern operating and financial policies by means of agreements. The evidence was thatif we evaluate those transactions purely on the basis of prudence from the point of view of the subject entity, these wonât make much sense independently for the vehicle (the subject entity). Further, the agreements between the companies allow the reporting entity to obtain benefits from the subject entity. The subject entity was raising funds solely for financing the operations of the reporting entity.
"<b>Still, there are many local regulations and legal decisions which have to be followed and any SPE should have to be judged under the provisions of local regulations and laws governing it specifically</b>"
I believe that SIC 12 applies to activities irrespective of the fact whether they are conducted by a legal entity. The basic purpose of SIC 12 is to address perceived abuses involving SPEs.
regarding your comments on the consolidation of funs floated by Asset management companies, I've noticed that these funds are dislcosed in the financial statements, but not consolidated, based on the potential risks associated with them for the reporting entities.
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