Smaller DIMS investment managers get accounts exemption

Smaller DIMS investment managers get exemption from filing GAAP-compliant accounts, audits

By Jonathan Underhill

May 5 (BusinessDesk) - The Financial Markets Authority has approved exemptions for smaller investment managers who provide discretionary investment management services (DIMS), meaning they don't have to prepare and lodge audited financial statements that comply with generally accepted accounting practice.

The exemptions come after the FMA in March sought feedback from small and medium-sized DIMS providers on proposed changes, saying audited financial statements "may result in limited benefit to clients" while imposing additional costs that may greatly outweigh the benefit.

A DIMS provider is one whose client has authorised them to make buy and sell decisions about their portfolio without needing to check back with the client. The most infamous DIMS provider was Ross Asset Management, whose manager David Ross perpetrated New Zealand's biggest Ponzi scheme and is now serving time in jail.

Under the exemptions, which apply with immediate effect once granted, licensed DIMS providers with less than $100 million in retail funds under management won't need to lodge GAAP compliant, audited accounts although they are still required to keep accounting records and meet any other company and tax reporting requirements. Licensed DIMS providers with $100 million to $250 million retail FUM are exempt from having their financial statements audited but they still must be lodged and be GAAP compliant.

"Under DIMS, the main protection for investors is that their assets are held either by themselves or by an independent custodian who is subject to audit requirements," said FMA general counsel Liam Mason.

Applications for DIMS licences must be received by May 31, the FMA said.

(BusinessDesk)

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