Accounting for an SMA as a single asset in BGL Simple Fund

The simplest way to account for an SMA in BGL Simple Fund, is to treat the SMA as though it is a single accounting asset.

The benefits of doing this are:

Simpler and more efficient than having to account for every transaction within the SMA.
Minimises confusion and risk of error where the fund directly holds some of the same securities that are held within the SMA.
Units will always equal 1, making it easier to record market value at end of period.

The impacts of doing this are:

In the statement of financial position, the SMA will be classified as a managed investment (rather than its constituent components of cash, managed investments, shares, units, etc.).
In the operating statement, income and realised capital gains from SMA assets will be classified as trust income (rather than their constituent components of interest, trust distributions, dividends, taxable & non-taxable capital gains, etc.).
In the investment reports, acquisitions and disposals of assets within the SMA will not be individually recognised, and the unrealised gains report may understate unrealised gains and overstate unrealised losses (due to the exclusion of cost base and reduced cost base impacts of non-assessable amounts).
The net market value of the SMA will be reported as an Australian managed investment in the Assets and Liabilities section of the Annual Return (rather than its constituent components of cash, debt securities, listed shares, listed trusts, etc.).

The process

The following is a summary of the steps you need to perform for each stage in the lifecycle of an SMA: that is, commencement, periodic maintenance, and closure.

Establishing the SMA as a single accounting asset

Set up the BGL Simple Fund general ledger account for the SMA.
Add the initial investments in the SMA (cash or in specie).

Maintaining the SMA as a single accounting asset

Add any cash or in specie transfers to the SMA (subsequent to the initial investment).
Add any partial cash or in specie withdrawals from the SMA.
Maintain SMA revenue and expenses.
Maintain SMA realised gains and losses.
Update the SMA market value.

Closing an SMA that has been treated as a single accounting asset

Perform a full (final) cash or in specie withdrawal from the SMA

This document describes each of the procedural steps in more detail.

Click the image for a comprehensive, step-by-step guide to accounting for your SMA as a single asset in Simple Fund.

More information

Contact our Client Services team if you have any questions about accounting for an SMA in BGL Simple Fund. Or register your interest in attending our next training session by completing the following registration form.