Financial reporting for mutual fund is the part of CA-final's topic " Financial reporting for Financial Institutions". Because mutual fund is the fund which is set up under trust. So, all the company who work for management of mutual fund, it is necessary to maintain the accounts of investors and to show financial reports for better control on mutual funds.
In simple words, suppose, I invested in one unit of mutual fund. Now it is the duty of mutual fund trust to tell me what total amount of mutual fund, it has invested?, what is it earned in the form of dividend, interest and capital gain? What amount will it give to us in the form of earning? What is the net asset value of this mutual fund? What do balance sheet and revenue account explain about the financial position and performance? All these questions' answer, we will get from financial reporting of Mutual Fund.
As per the SEBI's Mutual Fund Regulation 1996
Following things should be in Financial Reporting for mutual funds.
1. Net Asset Valuation (NAV)
2. Balance sheet of Mutual Fund
In the balance sheet of mutual fund, assets and liabilities are shown. All the assets and liabilities are shown on the basis of scheme. For this we can take Kotak Mahindra Mutual fund's Old balance sheet in which you will see all assets and liabilities have been classified on the basis of schemes.
3. Revenue Account
Revenue account shows the income and expenditure of mutual fund trust. It should also make scheme wise. In this revenue account, transfer of reserve and dividend distribution must be shown.
In simple words, suppose, I invested in one unit of mutual fund. Now it is the duty of mutual fund trust to tell me what total amount of mutual fund, it has invested?, what is it earned in the form of dividend, interest and capital gain? What amount will it give to us in the form of earning? What is the net asset value of this mutual fund? What do balance sheet and revenue account explain about the financial position and performance? All these questions' answer, we will get from financial reporting of Mutual Fund.
As per the SEBI's Mutual Fund Regulation 1996
It is the duty of mutual fund trustee company, sponsor and asset management company to show the financial reporting, so that its investor can know what is the financial position and performance of fund under mutual fund.
Following things should be in Financial Reporting for mutual funds.
1. Net Asset Valuation (NAV)
2. Balance sheet of Mutual Fund
In the balance sheet of mutual fund, assets and liabilities are shown. All the assets and liabilities are shown on the basis of scheme. For this we can take Kotak Mahindra Mutual fund's Old balance sheet in which you will see all assets and liabilities have been classified on the basis of schemes.
3. Revenue Account
Revenue account shows the income and expenditure of mutual fund trust. It should also make scheme wise. In this revenue account, transfer of reserve and dividend distribution must be shown.
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