IASB aligns accounting rules with investment funds

STANDARDS SETTER IASB has proposed changes to international accounting rules that would allow investment companies to present their investments in controlled entities on just one line on the balance sheet, measured at fair value through profit or loss.

Currently, the investments are consolidated with assets, liabilities, income and expenses recognised in the company’s own financial statements.

KPMG said the move was a step towards aligning the way in which funds are managed and performance gauged with financial reporting.

“This could be a significant, positive change compared with the current position in IFRS,” said Tom Brown, KPMG’s UK head of investment management and funds.

“Investment companies that qualify for the exemption could benefit from the amendments, not least by avoiding the cost of consolidating controlled investments.”

The proposals are in consultation until 5 January 2012.

Related reading

Fiona Westwood of Smith and Williamson.