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Accouting standards for investments in mutual funds

praveen (CA Final) (40 Points)

17 March 2014

The Finance company in which iam working is making its surplus funds by way of Investment (Short term) in Mutual Funds. I am confused about the accounting treatment and accounting standard applicability. Please guide me through this...

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8 Replies

CA. Mayur (Service) (147 Points)
Replied 19 March 2014

If your finance company is regulated by RBI then follow RBI master circular on investment otherwise follow AS 13 notified by MCA.

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 19 March 2014

Yes Since the Investments in Mutual Fund will be treated as AS-13,

Sathya Sankeerth K N (Chartered Accountant) (429 Points)
Replied 19 March 2014

Dear friends,

We cannot apply AS 13 for Mutual Funds as the accounting for Mutual Funds is clearly excluded from the applications of AS 13. Other option for us to follow is to apply Guidance Note on Accounting for Investments in the Financial Statements of Mutual Funds.

CA. Mayur (Service) (147 Points)
Replied 19 March 2014

AS 13 is not applicable to Mutual funds/ AMC companies but it will be applicable on investment made in mutual fund units. Thus AS 13 will be applicable.You can refer any listed company annual report for further confirmation on this, like for instance Dr. Reddy annual report of 2012 page 121.

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praveen (CA Final) (40 Points)
Replied 19 March 2014

Thanks to all for helping me out. I went through the annual report of Dr. Reddy where they have followed AS - 13 Cost or FMV whichever is lower, and they hasve quoted both the cost and market value for shareholders reference.

Raj Kanwar (MBA) (111 Points)
Replied 08 April 2014

Those are some valuable inputs on mutual funds by some of the exerts in the industry. Thanks all. It really helped me too.

Vivek Khakhkhar (Assistant Audit Manager) (201 Points)
Replied 11 April 2014

If mutual funds are held as investments then only AS 13 applies.

Digi@54321 (NA) (64 Points)
Replied 16 March 2022

Accounting of Mutual funds is a critical task for the financial intuitions. Better standards is good for the investors as they feel safe for their investments. This helps investors invest without much concern. If your institution follows accounting properly, then you can trust it for safeguarding your investments. These include the following
Calculation of the net asset value (NAV).
Anticipating and recording the income.
Keeping record of the interests from fixed income securities, capital gains, inflow and outflow of funds,
Maintenance of records or shares and transactions of shareholders.

The financial institutions have to abide by the master circular issued by the RBI. If your institution is following these rules then it is quite safe for you

For more information visit : Axis Mutual Fund