New Star chief says accounting rules are ‘silly’

Asset Management group New Star has criticised International Financial
Reporting Standards as being ‘silly’ after reporting profits less ?5m due to the
accounting rules.

The fund management group reported strong profit growth and a bigger maiden
dividend, but complained it was forced to spread front-end charges on unit trust
sales over six years rather than book them as immediate profit, The

‘Asking us to amortise them over the so-called lifetime of the product is
ludicrous. We just think it’s silly,’ said Howard Covington, chief executive.

IFRS forces fund managers to treat front-end fees conservatively. The
clampdown is aimed at insurance companies, and designed to compel them to look
at commissions more conservatively, since customers can in some case change
their minds.

Net Star’s operating profits, without applying IFRS, rose 90% to ?30.5m in
the half year to June 30.

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