Institute welcomes plans to drop 'needless diversity' when accounting for OEIC
The English ICA has welcomed proposals in draft rules for accounting for open ended investment companies which would see 'needless diversity' reduced.
Current practices for these new and innovative investment vehicles will be reduced by the proposed statement of recommended accounting practice issued by the Financial Services Authority for authorised open ended investment companies. This will assist the interpretation of financial statements, allowing comparison of investment performance.
Calum Thomson, chairman of the working party which drafted the response, said: ‘It would be inequitable for the initial investors in an OEIC to bear all the set up costs. It is therefore important for a mechanism to be found that enables charges or pricing of shares to be adjusted to spread this burden forward over a suitable period of time and for the effect of this spreading to be clearly disclosed to shareholders.’
The institute response, issued as a technical release, warns current requirements of the SORP, relating to the financial statements of umbrella funds, may not result in their showing a true and fair view.
The response also says clear guidance on the treatment of set up costs must be included to help those who prepare and use OEIC’s financial statements.
Additionally, the institute has called for regulations relating to auditors’ reports to be simplified, bringing them more into line with those required for other companies.
‘An acceptable treatment within the spirit of developing financial reporting standards therefore needs to be developed and guidance on it provided.’
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