IFM12552 - Offshore Funds: Reporting funds: computation of reportable income: equalisation: income adjustments on basis of accounting income

Where a reporting fund does not operate equalisation arrangements, but does specify under Regulation 53 of SI 2009/3001 that it intends to make income adjustments on the basis of accounting income, the following formula is used to calculate reported income:

AIU x RI

AI

Where:

• AIU is the sum of the accounting income per unit for all computation periods in the reporting period
• RI is the reported income of the fund for the reporting period, and
• AI is the sum of accounting income for all computation periods in the reporting period

The accounting income per unit for a computation period is calculated by dividing accounting income for the computation period by the average number of units in issue during the computation period.

Where RI is zero the reported income per unit of the fund for a reporting period is also zero.

However, where the difference between reported income per unit using this method and reported income per unit on the basis of reported income is more than 10%(of the latter amount) the fund must make income adjustments on the basis of reported income (see IFM12550).

Computation periods

The meaning of a computation period is detailed at regulation 72C.

A computation period must start:

• at the beginning of a reporting period, and
• immediately after the end of a previous computation period.

A computation period must end:

• at the end of a reporting period, and
• on any date when income is allocated to participants for distribution or accumulation.