Development Finance Update: Off-Balance Sheet Financing

If your area is using some form of off-balance sheet financing as an incentive to firms, you will want to read this article.

This month the Securities and Exchange Commission and the Financial Accounting Standards Board are handing down new rules and guidance aimed at improving the transparency of financial statements — in particular, off-balance-sheet transactions

After evolving over the last quarter-century into one of the most popular corporate finance tools in the United States — taking such forms as securitizations, synthetic leases, and unconsolidated entities — it seems that off-balance-sheet financing is being deconstructed in a hurry.

The Securities and Exchange Commission and the Financial Accounting Standards Board have handed down new rules and guidance aimed at improving the transparency of financial statements. The SEC is rewriting its guidance on MD&A disclosure, introducing Regulation G, and rewriting its rules governing Form 8-K. FASB is trained on consolidation of variable interest entities, or VIEs (formerly known as special-purpose entities, or SPEs) and on loan guarantees.

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