A human simplied summary Accounting issues for catastrophe bonds include variable interest entity ("VIE") rules applicable to all securitization vehicles. A VIE is a thinly capitalized entity that has insufficient equity to finance its activities without other forms of credit enhancement. Under GAAP, a catastrophe bond SPV is very likely to be a VIE. A company must consolidate any VIE in which it has a "controlling interest" thus bringing an off-balance sheet transaction on to the balance sheet. The standard requires a company to perform a qualitative analysis when determining whether it must consolidate a VIE. Under the standard, if the company has an interest in a VIE that provides it with control over the most significant activities of the entity (and the right to receive benefits or the obligation to absorb losses) the company must consolidate the VIE. A catastrophe bond should be structured so that no controlling interest exists but it is possible for the sponsor or a bond holder with a large position to become subject to the rules