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Press Release

For immediate release: Monday 2nd October


The Investment Management Association (IMA) has responded to a recent ruling from the Interpretation Committee of the International Accounting Standards Board on the treatment of initial fees.  Until now, management companies have accounted for initial fees in the year in which they received them, but this ruling now requires that companies must spread the initial fee over the expected life of an investment.

Commenting on the ruling, Richard Saunders, Chief Executive of IMA, said:

“This displays a complete disregard for economic reality and is the latest indication that academic purism prevails at the IASB.

The notion that an initial charge, which has been received and is non-refundable, should not be treated as revenue in the year in which it is received is absurd.  It is doubly absurd to require it to be spread over the ‘life’ of an investment which is open-ended and therefore has no fixed or even predictable term.  All that rules like this do is give a false impression of a company’s financial position and potentially mislead its shareholders.

What is required are practical accounting rules designed to ensure that accounts are informative and accurate.”  


Notes to Editors

1.  The International Accounting Standards Board (IASB) sets global accounting standards and

co-operates with national accounting standard-setters to achieve convergence in accounting standards around the world. 

2.  International Accounting Standard 18 covers revenue recognition.  The IASB's International Financial Reporting Interpretations Committee has concluded, in the context of IAS 18, that initial fees received by managers for sales of units should not be recognised upfront.

For further information, please contact:
Mona Patel, Head of Communications, IMA, 020 7831 0898

Out of hours contact:
Mona Patel, Head of Communications, IMA, 07834 089 332

Investment management association