AsU 2014-11 also amends accounting guidelines for pension financing transactions. Under these agreements, the first step is a typical repo in which securities are transferred for cash. Then, in the second stage, the purchaser returns the asset as collateral for cash payment to the assignor and agrees to repurchase the guarantee for a certain amount of cash at a given time. These agreements result in off-balance sheet financing. Under previous rules, the part of the agreement was considered a sale; It is now likely that such agreements will result in a secured loan that takes into account most repurchase transactions. The proposed guidelines would eliminate current CSA 860 guidelines for pension financing operations. Under the current guidelines, there is a reedative presumption that an initial transfer and buy-back financing concluded simultaneously with or in the economic phase between them would be considered to be related to each other and could therefore be considered derivatives if the assignor regained effective control over the assets initially transferred through a buyback. Because some deposits are settled at the maturity of the transferred assets, they do not meet the repurchase requirement before maturity, so that the ceder does not retain any effective control. If the remaining conditions of de-accounting in CSA 860 are met (i.e. the isolation and the right of the purchaser to wage or exchange the assets), the rights payable at maturity would be counted as a sale with a forward redemption contract (i.e.
a derivative valued at fair value by the net result). However, the FASB considers that such accounting “does not clearly provide sufficient information on a company`s risks [and] could potentially mask the company`s liquidity needs to meet the obligations arising from these transactions.” Finally, ASU 2014-11 is also extending advertising obligations for the advertising of financial assets recorded as sales, as well as certain transfers recorded as guaranteed bonds (Abhinetri Velanand, Shahid Shah and Adrian Mills, “FASB makes limited changes to its Guidance Board accountant,” Deloitte Heads Up, June 19, 2014). In the case of transactions or pension agreements marked as sales, information should be provided on the amounts of accounting, the amounts received for the guarantees, the outstanding commitments of the agreement and an explanation of the corresponding amounts recorded on the balance sheet. In addition, bonds issued for all transactions and pension agreements in the form of secured bonds must include disclosure of security, remaining commitments and a risk assessment. 2 The proposed ASU defines an “agreement under which the transferor (party to the repo) transfers a financial asset for cash payment to an acquirer (counterpart or consideration) while agreeing to later repurchase that financial asset for an amount equal to the amount of money exchanged, plus a specified interest factor.” On January 15, 2013, the FASB published an ASU1 proposal to amend the United States. GAAP, requiring repurchase contracts (“rest”2) that meet the criteria of the secured credit account, recorded as secured obligations and not as forward sales, including deposits that are settled at maturity of the transferred assets.3 The proposed ASU would not change the general de-accounting conditions existing under ASC 860 with respect to the insulation and the right of the assignor. to pawn or exchange assets to determine whether transfers of financial assets are accounted for as a sale of financial assets or asset-backed loans. However, the proposal would change the conditions to determine whether the assignor retains effective control over the transferred assets.