Sham Spes, Part I: The Legal Issues of International Accounting Standards on the Consolidation of Special Purpose Entities

Abstract

The article is part one of a two part series that explores the difficulties that accountancy professional bodies have in attempting to find standard workable definitions of consolidation in the face of the use and abuse of special purpose vehicles. The questions of legitimacy and legality of corporate form are examined in light of recent history of accountancy reform. The authors propose an "anti-sham principle" to help coordinate and effect a benchmark across disperse views on the legitimacy of manipulative valuation and off-balance sheet structures.