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Assets Held for Investment Purpose


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#1 bzorc

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Posted 10 September 2009 - 08:12 AM

As it's audit season again, the issue has again arose regarding the footnote regarding assets representing 5% or more of current assets. For years, we have used the asset figure as of the beginning of the year; now, there are those who feel it should be as of the end of the year. There is nothing in the audit guide or Form 5500 instructions as to whether or not to use BOY or EOY assets to determine the 5% level.

Opinions? Or, if there is a thread to previous conversations on this topic, it would appreciated. Thanks much!

#2 david rigby

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Posted 10 September 2009 - 09:22 AM

See explanation for Line 4j on page 35 of the 2008 instructions. Reference is to "current value". I read that to mean "the value at the time of the transaction", without regard to BOY or EOY value. Anyone else?
I'm a retirement actuary. Nothing about my comments or advice is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, certainly not all the time, it might be reasonable to interpret my comments as actuarial advice.

#3 bzorc

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Posted 10 September 2009 - 09:50 AM

See explanation for Line 4j on page 35 of the 2008 instructions. Reference is to "current value". I read that to mean "the value at the time of the transaction", without regard to BOY or EOY value. Anyone else?

David, thank you, but I'm not looking at the Schedule of Assets Held. I'm specifically looking at the footnotes in the audit report for a limited scope audit, where you have to reference the various funds held within the plan. An asset greater than 5% has to be disclosed or asterisked. This is where I'm looking for the BOY or EOY classification.

#4 Dell

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Posted 29 September 2009 - 08:49 AM

There is confusion because there are two separate requirements. It sounds like you are asking about the disclosure required in the footnotes under GAAP. For that purpose, you disclose investments exceeding 5% of Net Assets at end of year.

For the supplemental schedule of reportable transactions for 5500 purposes, it's 5% of beginning of year Total Assets.