Although focused primarily on the investment management industry, new guidance expected by the end of the year on consolidations could become a big deal for companies in other industries as well.

Accountants are starting to advise companies to get familiar with what the Financial Accounting Standards Board is planning to publish in the fourth quarter of 2014 to provide new criteria for companies to help determine when a decision maker is using its power as a principal or an agent, which could affect whether a particular business unit should be consolidated to a given company’s financial statements. The guidance is expected to affect an entity’s evaluation of whether limited partnerships and similar entities should be consolidated, whether variable interested held by a company’s related parties affect the consolidation conclusion, and whether fees paid to a decision maker or other service provider would result in the consolidation of a variable interest entity, says Deloitte & Touche in a recent alert to clients.

“It is expected that under the amended guidance, many limited partnerships will be VIEs and may be subject to the VIE disclosure requirements regardless of whether they were consolidated,” says Deloitte partner Trevor Farber along with senior manager Abhinetri Velanand in the alert. They are advising all reporting entities to reevaluate their previous consolidation conclusions in light of their involvement with current VIEs, any limited partnerships not previously considered to be VIEs, and any entities previously subject to the deferral that is permitted in Accounting Standards Update No. 2010-10.

Deloitte is predicting a number of possible effects of the guidance that FASB is expected to adopt. It’s possible, for example, that partnership arrangements that include simple majority kick-out or participating rights might no longer be VIES, or that partnerships that do not include such rights would need to be evaluated for consolidation, the firm says. It’s also possible the requirement to consider rights held by the general partner may result in the deconsolidation of a partnership that includes simple majority kick-out rights.

“Entities should start considering the extent to which they may need to change processes and controls to apply the revised guidance, including those related to obtaining additional information that may have to be provided under the disclosure requirements,” Deloitte advises. Those disclosure requirements could be particularly difficult for companies that might elect to adopt the guidance early. Companies should also be alert to the expected guidance as they enter into new transactions, considering how the new rules might affect those transactions, the firm says.