Another UITF 40 question - Financial Advisors

Another UITF 40 question - Financial Advisors

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An independant financial advisor receives income on a commission only basis. At the year end they had been working on putting together a significant investment package. After the year end the relevant investment is made and the advisor receives the commission. In respect of the UITF 40 rules are we in a position where:-

1. The advisor is operating in a manner similiar to solicitors "no win no fee". That is to say that unless (and until) the investment is made there has been no contractually earned income and therefore no accrual in the accounts OR
2. The advisor is operating under principals similiar to accountants where it doesn't matter that you only have a contractual earned when the matter is complete; the fact that you were working on a service that results in income means UITF40 rules must be applied.

If the reply to the above is item 2, how would the response differ if to-date no invetsment had been made and therefore no commission earned
M T Thorts

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By MBK
02nd Nov 2006 13:38

It is definitely option 1.....
because the IFA has no "right to consideration" at the year end. He has done no work for which he can charge anybody at that time.

At the year end the right to consideration is conditional or contingent on a specified future event or outcome, the occurrence of which is outside the control of the seller - not my words, the words of the UITF (para 19).

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