An issuer might have a variety of long term investments that affect how the certifying officers design and evaluate the effectiveness of the issuer’s DC&P and ICFR. In particular, an issuer could have any of the following interests:
(a) an interest in an entity that is a subsidiary which is consolidated in the issuer’s financial statements;
(b) an interest in an entity that is a special purpose entity (a SPE) which is consolidated in the issuer’s financial statements;
(c) an interest in an entity that is proportionately consolidated in the issuer’s financial statements;
(d) an interest in an entity that is accounted for using the equity method in the issuer’s financial statements (an equity investment); or
(e) an interest in an entity that is not accounted for by consolidation, proportionate consolidation or the equity method (a portfolio investment).
In this Part, the term entity is meant to capture a broad range of structures, including, but not limited to, corporations. The terms “consolidated”, “subsidiary”, “SPE”, “proportionately consolidated”, and “equity method” have the meaning ascribed to such terms under the issuer’s GAAP. In this Part, the term “underlying entity” refers to one of the entities referred to in items (a) through (e) above.