This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.  
 

Channel Islands In Good Stead To Attract European Funds

Thursday, February 25, 2010

The Channel Islands swift adoption of International Financial Reporting Standards (IFRS) makes it better placed to meet the changing needs of the European investment fund industry, according to a survey by Ernst and Young.

Ernst and Young’s survey revealed an expectation, amongst respondents that IFRS will soon become the European standard for investment funds. Senior Manager at Ernst and Young’s Asset Management Group, Richard Le Tissier, observes that there is little evidence that IFRS is being adopted by European nations, putting the Channel Islands in greater to meet the future needs of the industry.

“The Channel Islands were among the first jurisdictions to embrace the use of IFRS and therefore that puts fund managers and administrators in an excellent position. Many local companies have already adopted IFRS to some extent for investment fund reporting,” he explained.

However E&Y has observed that, much like elsewhere in Europe, IFRS is still not being fully utilized by the fund industry in the islands and to a large extent many funds still apply other forms of reporting. Guernsey and Jersey laws and regulations allow funds to prepare financial statements in accordance with Generally Accepted Accounting Principles (GAAP) and therefore many use alternative standards such as UK or US GAAP. E&Y has said that, in the medium term, it is looking increasingly likely that UK GAAP will no longer be acceptable for funds going forward.

According to Mr Le Tissier: “Should the UK Accounting Standards Board (ASB) proceed with its Policy Proposal – The Future of UK GAAP, current UK GAAP users will be required, in most situations, to adopt IFRS from January 1, 2012.”

“While this may have a significant impact for financial statement preparers in the UK, the impact will probably be smaller in the Channel Islands. The number one concern of respondents on conversion to IFRS was the IFRS technical knowledge of their staff. Many local companies are already familiar with IFRS and for those that are not, they have immediate access to a community that is familiar with the requirements.”

The importance of financial reporting has been thrown into the spotlight and recent economic events have had a profound impact on the asset management industry and, in particular, hedge funds. The G20 has called for the setting up of one single set of high-quality global accounting standards to aid global financial stability.

The poll of leading fund managers, administrators and supervisors in 44 European countries found that just a fifth of fund managers and administrators who currently have the option to apply IFRS do so exclusively. Of those that have converted to IFRS, 48% reported that it had significantly improved the quality of their financial reporting.

The survey also revealed that 48% of managers and administrators believe that conversion had significantly improved the quality of financial reporting.

So why don’t more people adopt IFRS?, questioned Le Tissier. “This could be tax driven, or simply due to historical reasons, the financial statement has always been reported using another GAAP, so why change,” he said.

Le Tissier believes it is more likely that the reason for not changing may relate more to the broad nature of IFRS: “IFRS has been developed so that it can be applied by all forms of entities regardless of industry, and unlike UK and US GAAP, it does not have an industry specific guide.”

Le Tissier predicts that a reporting standard which combines US GAAP and IFRS seems the “most logical solution” for the industry.”

“Until now there has been very little appetite by the International Accounting Standards Board (IASB) to introduce specific industry standards. However, during its February 2010 meeting the IASB discussions took a rather surprising turn.”

“ED 10 - Consolidated Financial Statements, is the proposed replacement to the current consolidation accounting standard, which requires funds to consolidate all investments they control. Many in the industry argue this distorts the relevance of financial statements as investors are generally only concerned with the fair value of the investment,” Le Tissier continued.

“During the meeting the IASB tentatively agreed to consider an exception for investment companies similar to US GAAP. This is a very encouraging development and although discussions are still at an early stage and we wait to see how this will evolve, this is clear evidence that the IASB are taking on board one of the industries major concerns.”

Concluding, Le Tissier stated:

“Channel Island based investment funds could be losing out by not adopting IFRS.”

“Yes, there are some concerns and, yes, there will be pressures on implementation and costs during transition, but the rewards will result in standardised financial reporting and cost efficiencies, particularly in training, which will benefit the industry and its key stakeholders.”

“Take the new segment reporting standard as an example, some argue this is unnecessary disclosure, while others would use it to reaffirm a funds tax position here in the islands. The rapid changes to IFRS which result in ever changing disclosure requirements can be challenging, but in the spirit of transparency and in addressing G20 concerns for openness it is clear that the industry should take advantage of the standards.”

Mailing List

Click here to manage your mailing list preferences, or view our privacy statement.


The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




Latest News

IoM Consults On Funds Sector Rules
22/5/2017
The Isle of Man Financial Services Authority, which supervises the island's financial services sector, is seeking feedback on draft guidance dealing with the governance of collective investment schemes.

Dubai Tax-Free Zone Seeing New Business From India
19/5/2017
The Dubai International Financial Centre, the leading financial hub in the United Arab Emirates, has become an increasingly popular destination for Indian banks, financial institutions, and fund managers, the zone has said.

Guernsey Issues Warning On 'Sark Company Registry'
18/5/2017
The Guernsey Financial Services Commission has issued a warning concerning an entity named "Sark Company Registry," while investigations are ongoing.

Abu Dhabi Free Zone Hopes To Attract Venture Capital Firms
15/5/2017
Abu Dhabi Global Market, the low-tax international financial center, has unveiled a regulatory framework for managers of venture capital funds.

Australian Budget Targets Housing, Tax Compliance
10/5/2017
Australian Treasurer Scott Morrison's 2017 Budget focused on measures to cool the housing market and crack down on tax avoidance.

Australia Delays Action On Stapled Structures
2/5/2017
The Australian Government has decided to extend a review into the taxation of stapled structures. It will not tackle the issue at the upcoming Budget.

BVI Financial Firms Need To Develop New Niches
13/4/2017
BVI Finance, the financial services industry promotional agency, has said the industry must actively adapt to target new opportunities and promote new offerings internationally.

ADGM Revises Pooled Fund Capital Req's
11/4/2017
Abu Dhabi Global Market, the low-tax international financial center, has revised the capital requirements applicable to managers of collective investment funds, with effect from April 10, 2017.

ADGM Consults On Allowing REITs
6/4/2017
Abu Dhabi Global Market, the low-tax international financial center, is consulting stakeholders on plans to allow the establishment of private real estate investment trusts.

Gibraltar To Offer Foundations
4/4/2017
Gibraltar's Parliament recently passed a bill permitting the establishment of Private Foundations.

Gibraltar Acts To Preserve QROPS Status
3/4/2017
Gibraltar has made new pension regulations to maintain its attractiveness as a jurisdiction from which to transfer UK pensions.

Australia Consults On Taxation Of Stapled Structures
30/3/2017
The Australian Treasury has launched a consultation on the tax consequences of the re-characterization of trading income derived through the use of stapled structures.

Australian DPT Legislation Passes Senate
27/3/2017
The Australian Senate has passed legislation to introduce a diverted profits tax from July 1, 2017.

Guernsey Funds Sector Grew In 2016
27/3/2017
The total value of funds business in Guernsey grew by more than GBP28bn (USD32.5bn) last year.

New Zealand Explains Foreign Trust Disclosure Changes
27/3/2017
New Zealand has published guidance on the increased disclosure requirements for foreign trusts with New Zealand-resident trustees.