IAS 28 — Significant influence: Fund manager acting as an agent

Date recorded:

Fund manager’s significant influence over a fund - Agenda Paper 8B


In 2014 and 2015 the Committee has discussed a request to clarify whether, and how, a fund manager should assess if it had significant influence over a fund that it managed and in which it had a direct investment. At the time, the Committee decided to put the issue on hold because it believed that the issue should be better considered as a part of the Board’s comprehensive project on the equity method of accounting. A tentative agenda decision was issued in September 2014 to this effect. The Committee affirmed its decision in January 2015 in the light of comments received but did not proceed to finalise the agenda decision.

In November 2017 the Interpretations Committee was updated on progress in the equity method project. The Committee decided to issue a draft decision not to add this issue to its agenda.

Staff analysis on comment letters received

The Committee received four comment letters. All of the respondents had similar concerns about the wording of the decision. They were concerned that the decision implied that a fund manager did not need to assess whether it had significant influence if it did not have control or joint control, and that the principal-agent considerations could be disregarded. The staff agreed that neither implication was intended or appropriate.

Staff recommendations

The Staff recommended that the Committee finalise the agenda decision, but amended to address the concerns noted above.


The IC agreed to finalise the agenda decision subject to drafting changes without any significant discussion.

A couple of IC members noted that removing the word ‘whether’ from the sentence ‘IAS 28 does not contemplate whether and how decision-making authority held in the capacity of an agent affects the assessment of significant influence’ is a substantive change from the committee’s previous discussions. This is because without ‘whether’, the sentence implies that agency rights automatically affect the assessment of significant influence. The Staff agreed to make appropriate changes to avoid this unintended consequence.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.