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Comments invited on new draft SORP for UK Authorised Funds

  • UKGAAP Image

08 Aug 2013

The Investment Management Association (IMA) has published an Exposure Draft (ED) on a revised Statement of Recommended Practice (SORP) setting out proposals for the preparation of financial statements by UK authorised funds. Comments are invited by the IMA until 31 October 2013.

SORPS issued by the IMA apply to UK authorised funds preparing accounts under UK GAAP to present a ‘true and fair view’ and are intended to supplement accounting standards and other legal and regulatory requirements to reflect transactions or circumstances that are unique to the sector within which authorised funds operate.

The ED updates the previous SORP to include the requirements of FRS 100 ‘Application of Financial Reporting Requirements’ and FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'; two of the three main standards that were introduced as a package to replace UK GAAP.  The revised SORP includes:

  • New disclosures about the methods to determine fair value;
  • Revised disclosures about the risks to which funds are exposed; and
  • Simplification of the recognition of debt security interest

The SORP also includes a number of specific requirements aimed at non-UCITS (Undertakings for Collective Investment in Transferable Securities) funds introduced as a result of the Alternative Investment Fund Managers Directive (AIMFD) in July 2013.  The SORP includes an appendix as to how to apply the requirements in the context of FRS 102 including a requirement to disclose gains and losses that are realised separately to those that are unrealised in the notes to the statement of total return.      

Proposals are also made for a new format to present performance and charges in the ‘comparative table” required by the Financial Conduct Authority (FCA) regulations (the Collective Investment Schemes sourcebook).  The SORP proposes “a format for the presentation of this data such that there will be a single table for each unit class which enables investors to focus on the numbers relevant to their holding”. 

The ED proposes that the final SORP will be effective for accounting periods beginning on or after 1 January 2015 although, for certain provisions not connected with FRS 102, it recognises that earlier application may be desirable and seeks comments on this.

Click for the link to the Investment Manager Association website (includes links to the Invitation to Comment and the Exposure Draft Statement of Recommended Practice: Financial Statements of UK Authorised Funds).

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