Difference between SPE and VIE

CFA Level II
#1

I’ve read this section over and over and I still don’t understand the difference between a SPE and a VIE. Can anyone explain in plain English?

#2

A VIE gets consolidated and a qualified SPE does not. I think that is right.

#3

Yuppers.

#4

lets say as corp u want to pull a fast one on investors ands analysts by “forming” a company that will for expample purchase debt from u etc that favour the parent comp…the effectr being that your financial statements look better… not so fast say the US GAAP and IFRS if this entity that you have created fail certain tewst then u must consol…

#5

so if it’s not a VIE, for the purposes of this exam, we can assume it’s a SPE? thanks in advance guys

#6

QSPE not allowed by IFRS? or is it GAAP?

#7

qspe not allowed by irfs.

#8

SPE was used for anything with ‘special purposes’ in the past, now VIE refers to an entity that must be consolidated whereas QSPE does not need to be consolidated (US GAAP). no QSPEs in IFRS. and no we can’t assume its one way or the other - need to apply beneficiary/equity ‘tests’ to see who must consolidate it.

#9

If I understand it correctly, SPE is a more general term than VIE. VIE are the focus of the LOS regarding entities which must be consolidated on a Sponsor’s financials. QSPEs are a US GAAP only concept for non-consolidated entities.

#10

SPE is the old term that is not used anymore. only VIE v. QSPE

#11

SPE still needs to be consolidated by the primary beneficiary QSPE doesn’t

#12

yes like dcbreber said for all intents and purposes SPE = VIE, you should only be concerned about differentiating SPE/VIE from a QSPE (the latter isn’t consolidated and only exists under GAAP)