The Financial Accounting Standards Board staff issued a proposed position Tuesday, dubbed Proposed FSP FAS 140-b, outlining its concerns over whether 12b-1 fees are a sellable asset or a future flow. The Board calls into question the current practice of treating sold fee collection rights as sold assets as opposed to deferred income. It is unlikely, however, to have much of a negative impact on mutual fund fee ABS due to the small chance that mutual fund managers would suspend broker fees because of the changed accounting status, sources said.
The limited impact seen for the 12b-1 fee sector is primarily at the individual fund level, noted Moody's Investors Service Senior Vice President Michael O'Connor. "This shouldn't negate the true sale status of the assets, just how the [sold] fees are accounted for in the fund's financials," O'Connor said. Furthermore, the funds would not need to restate previously filed financial statements, but would instead report the cumulative effect in financial statements going forward.