Fund Accounting Prinicples

Start Dates: TBC

Duration: 2 Days

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Programme overview

This practical course covers the fund accounting principles behind unit trusts, mutual funds, pensions funds and hedge funds.

Learning outcomes:

• Understand what is meant by net asset valuation (NAV) and why a NAV is calculated.
• Appreciate what is meant by subscriptions and redemptions.
• Understand the implications of a NAV error.
• Describe the key elements of an equity trade.
• Discuss the significance of trade date and settlement date.
• Explain how equity positions affect the NAV.
• Describe how interest income is recognised by an investment fund.
• Discuss the accruals concept.
• Calculate interest accruals on cash deposits.
• Describe what is meant by a cash dividend.
• Explain how cash dividends affect the market price of the share.
• Describe how fixed and variable expenses are calculated and accrued.
• Account for prepaid expenses and explain how expenses affect the NAV.
• Discuss the key elements of a valuation pricing policy.

Who is the course for?

This course will benefit those from investment and commercial banking
areas, fund management, as well as those who support these
constituencies. It will use a current published set of accounts, and a case
study exercise which will task the delegates to create their own set of
accounts.

Course Content:

  • Introduction
  • UK GAAP
  • Accounting concepts
    – Introduction to International Accounting Standard
  • Key financial statements – overview and format (for a fund)
    – Statement of total return (P & L account)
    – Statement of changes in unit-holders’ net assets
    – Balance sheet
    – Portfolio statement
    – Summary of material portfolio changes
  • Statutory reporting for a fund – using real set of accounts
    – Reports of fund manager, trustee and auditors
    – Audited annual financial statements
    – Notes to the accounts
    – Statement of NAV per unit and comparative table
    – Distribution table
  • Double entry bookkeeping
    Transactions for an investment fund:
    – Accounting for equities
    – Accounting for fixed income securities
    – Accounting for derivatives
    – Accounting for investment income

– Accounting for fund expenses

Case study example of a fund
Capital instruments
– Shares – ordinary and preference
– Fixed income – FRNs and types of bonds
– Hybrids – warrants and ADRs
– Derivatives

  • Corporate actions and their accounting treatment
  • Pricing capital instruments
    – Discounted cash flows
    – NAV
    – NRV
    – Replacement cost
    – EPS
    – P/E ratio
    – Dividend yield

 

 

  •  Case study example of a fund
     Capital instruments
    – Shares – ordinary and preference
    – Fixed income – FRNs and types of bonds
    – Hybrids – warrants and ADRs
    – Derivatives
     Corporate actions and their accounting treatment
     Pricing capital instruments
    – Discounted cash flows
    – NAV
    – NRV
    – Replacement cost
    – EPS
    – P/E ratio
    – Dividend yield

Trainer Profile

Please contact info@ifsskillnet.ie for further information on training providers.