In its March 2011 Financial Services Newsletter, E&Y issues the latest in its series on exchange traded funds (ETFs). In the March publication, E&Y summarizes some general accounting considerations related to ETFs and illustrates by contrasting other types of investment companies. ETFs are considered investment companies for tax purpose and under the Investment Company Act of 1940, and are treated as such in most regards. ETFs, however, are treated differently in certain accounting respects. E&Y goes into each of these areas generally, describing ETF treatment, and drawing comparisons where necessary with other investment companies.
In particular, the newsletter discusses:
- Revenue recognition;
- Valuation;
- Financial reporting; and
- Capital share activity.
E&Y's newsletter lays out each of these topics in a clear and understandable way, and in plain, non-technical language. This newsletter should be an excellent resource for those interested in understanding some of the unique characteristics of ETFs.
The full text of E&Y's newsletter is available at: https://eyaprimo.ey.com/natlmktgaprimoey/Attachments/FSO_ETF_J00374.pdf