When chairmen of the UK'S FTSE 100 companies recently met the Financial Reporting Council (FRC), which oversees accounting and auditing regulation, to discuss corporate governance, they raised serious criticisms of international financial reporting standards (IFRS).
But while the majority felt that the difficulties with IFRS were fundamental, I believe the causes are more likely to be teething troubles or a misplaced nostalgia for an accounting regime that would, in fact, have moved in much the same direction as IFRS. However, I do agree there should be more discussion of fair value accounting, which relies on market values or a calculation of present value.
The chairmen's complaints, often strident, can be summarised thus:
*Company accounts have become longer and less intelligible, or "comprehensive at the expense of being comprehensible".
*The information is not being used by investors and analysts, or by companies in running the business.
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