United States

Division of Investment Management addresses accounting matters

FINANCIAL REPORTING INSIGHTS  | 

The Chief Accountant of the SEC’s Division of Investment Management (IM) recently issued a Dear CFO (DCFO) Letter to assist registered investment companies and business development companies and their independent public accountants in addressing certain accounting, auditing and financial reporting matters. The letter highlights updates the IM Staff has made to its Accounting Matters Bibliography, including the following:

  • Rescinding IM-DCFO 1998-01 due to the elimination of the average commission rate disclosure in prospectuses upon adoption of the final rule, Securities Offering Reform for Closed-End Investment Companies

  • Modifying IM-DCFO 1998-04 to clarify the procedures investment companies must follow when there is a change in independent registered public accounting firm

  • Modifying IM-DCFO 2001-02 to reflect the Staff’s view that to meet the audit requirement related to the senior securities table, the independent accountant must express an opinion on the senior securities table itself or on a financial statement or financial highlights that include the senior securities table (i.e., the audit requirement is not met merely because the information in the table is derived from audited financial statements)

  • Adding IM-DCFO 2020-01 to provide guidance regarding the determination of the date on which a fund is deemed to have commenced operations, which may be different for performance-calculation and financial-reporting purposes

  • Adding IM-DCFO 2020-02 to clarify the financial statement requirements in an initial registration statement for business development companies

  • Adding IM-DCFO 2020-03 to provide considerations an investment adviser should evaluate when contemplating the utilization of audits of financial statements for multiple pooled investment vehicles on a combined basis for purposes of satisfying the Custody Rule

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