New accounting guidance for variable interest entities: will the new rules reduce the risk?

Abstract

Special purpose entities, generally known as SPEs, have been the bane of everyone in the risk management and the asset management business. But they can also be extremely useful. Now, post‐Enron, further rules have been put into place to ensure that SPEs are clearly identifiable and their purpose can be transparent. The author examines how these new rules will work and assesses the likelihood of success.