FASB Proposes Rules for Some Financing Vehicles

The Financial Accounting Standards Board issued proposed rules Tuesday setting conditions under which companies can transfer assets to off-balance-sheet entities.

FASB, which sets U.S. accounting standards, listed requirements for a financing vehicle to be a considered a “qualified special-purpose entity,” which doesn’t have to be consolidated on its sponsor’s balance sheet.

The accounting board has been under pressure from lawmakers and regulators to limit special-purpose entities following the collapse of Enron Corp.

Among the guidelines is a proposal that an entity wouldn’t be considered a qualified special-purpose entity if it relies on its sponsor to provide cash or satisfy its obligations.