CERTYNEX IFRS ACADEMY

A colleague concludes: "The manager's exposure to the fund's returns is below the percentage set by the standard; it is therefore an agent." What is wrong with this reasoning?

It treats as a rule of the standard an exposure percentage that the standard does not set; such numerical thresholds are only practices that are sometimes applied.

It overlooks that the manager's remuneration, and not its exposure, determines whether it is an agent, exposure to other interests not forming part of the analysis.

It confuses agent and principal: a manager whose exposure to returns is low is in fact a principal that controls the fund.

It applies a correct numerical rule but must also check that the fund is listed, because the percentage set by the standard applies to listed funds.