WASHINGTON, DC – Managed Funds Association (MFA) is urging the Financial Accounting Standards Board (FASB) to withdraw its proposed Accounting Standards Update (Update) regarding income tax disclosures by issuers in financial statements in a comment letter today. Alternative asset managers depend on disclosures to develop investment strategies that generate steady returns for their beneficiaries, like pensions, foundations, and endowments.
MFA members are investors, lenders, creditors, and other allocators of capital for which providing information that is useful in making rational investment, credit, and similar resource allocation decisions is critical with respect to financial reporting. MFA’s letter outlines how the proposed Update will result in the disclosure of misleading income tax information and significant diversity in how reporting entities apply previously well-understood accounting principles. Further, the Update does not address investors’ need for greater transparency and fails to improve the decision-usefulness of income tax information for financial statement users.
“Investors need decision-useful income tax information. Unfortunately, FASB’s Update provides investors needlessly granular information, resulting in misleading signals for market participants,” said MFA Chief Counsel and Head of Global Regulatory Affairs, Jennifer Han. “FASB should withdraw the Update and reengage with stakeholders to craft an Update that will benefit investors and the markets. Failure to get the Update correct will harm financial statement users, including investors, and their beneficiaries including pensions, foundations, and endowments.”
MFA’s comment letter is available here.
About the Global Alternative Asset Management Industry
The global alternative asset management industry, including hedge funds, credit funds, and crossover funds, has assets under management of $4 trillion (Q4 2022). The industry serves thousands of public and private pension funds, charitable endowments, foundations, sovereign governments, and other global institutional investors by providing portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets.
About Managed Funds Association
Managed Funds Association (MFA), based in Washington, DC, New York, and Brussels, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 170 member firms, including traditional hedge funds, credit funds, and crossover funds, that collectively manage nearly $2.2 trillion across a diverse group of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors to diversify their investments, manage risk, and generate attractive returns over time.