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On the whole ACCA agrees with what the Board intends to do, but there are a few matters we feel should be amended or explained in more detail, so there is a clearer picture of what will be happening once the Standard comes into force.
—Richard Martin, head of corporate reporting, ACCA

As the proposals from the International Accounting Standards Board (IASB) are considered, ACCA questions some of the details

The transparency of the accounts of investment entities will be improved if proposals to amend the way they present their investments are adopted. However more work needs to be done to make the new rules easier to understand and implement, says ACCA (the Association of Chartered Certified Accountants). 

The proposals of the IASB (International Accounting Standards Board) concern the accounting by investment entities – basically companies which hold a subsidiary for its investment income and gains. 

The IASB is currently carrying out a series of roundtables to discuss the proposals - the general consultation period has closed. 

ACCA has questioned some of the IASB’s suggestions, which aim both to specify the criteria for determining when an entity is an investment entity, and to set out how an investment entity accounts for its investments.

The proposals are that an investment entity should not consolidate the entities it controls for investment purposes, but should account for these at fair value, with changes in that value being recognised in profit or loss.

ACCA’s belief is some of the details in the proposals need to be explained further or amended, so it welcomes the fact that roundtables have been organised by the IASB.

Richard Martin, head of corporate reporting at ACCA, says: 'The definition of an investment entity - one which invests in a subsidiary for long or short term financial gain – needs to be considered further. However, ACCA agrees that investment entities’ financial statements would provide more meaningful information if they do not consolidate entities which are controlled by them, and in which the interest is held only for investment purposes.' 

Richard Martin added: 'We have a further concern, and that centres on the issue of control. How often does an investment entity, as a significant stakeholder, actually control its investee? 

'On the whole ACCA agrees with what the Board intends to do, but there are a few matters we feel should be amended or explained in more detail, so there is a clearer picture of what will be happening once the Standard comes into force.'

The finalised International Financial Reporting Standard on investment entities is expected to be published by the IASB in the second-half of 2012.

- Ends –

For further information, please contact:

Alana Sinnen, ACCA Press Office 
tel: + 44 (0) 207 059 5807
mob: +44 (0) 7715 812120
alana.sinnen@accaglobal.com  

Notes to Editors

  1. To read ACCA’s response to the exposure draft in full, visit the ACCA website in the 'Related Links' section to the left of this article. 
  2. To find out more about investment entities, visit the IFRS/IASB website in the 'Related Links' section to the left of this article.
  3. ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. 
  4. We support our 147,000 members and 424,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 80 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence. 
  5. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.