Financial reporting: proposals for action

Article Abstract:

The Institutes of Chartered Accountants of Scotland (ICAS) and in England and Wales (ICAEW) each issued separate research reports that suggested different guidelines for the reformation of financial reporting. The ICAS issued 'Making Corporate Reports Valuable (MCRV), and the ICAEW issued the Solomons report. The MCRV and the Solomons report do share similarities such as their assumption that information be relevant to user groups, their conclusions that financial statements should portray economic reality and use current values, and their advocacy of a comprehensive income statement. However, there are major differences. Solomons advocates a traditional accounting framework as a solution, while MCRV offers a financial package as an ideal. For valuation, Solomons advocates the Value to the Business system, while MCRV prefers the Net Realizable Value system. Solomons envisions no place for goodwill in financial statements while MCRV advocates treating it as a depreciating asset.

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Financial reporting: proposals for action

Article Abstract:

The Institutes of Chartered Accountants in England and Wales and of Scotland have held a joint conference considering proposals for the reform of financial accounting. Both Institutes have issued reports on the matter which identify user groups, focus on the importance of accounting data meeting the needs of those groups, and call for a comprehensive income statement based on a financial maintenance concept. Differences between the reports will necessitate a resolution of the valuation issue, and the Scottish Institute's proposals must be consolidated into a system that can be implemented within a delineated time frame. In addition, there must be a demonstration that the system can be implemented in stages, the preferred stages of development must be defined in a timely manner, and a Utopian view of the system as a panacea for all problems in accounting must be avoided

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The future shape of financial reports

Article Abstract:

The Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland formed a joint research committee in 1989 to investigate the two Institutes' approaches to reforming financial reporting. The committee has recently issued a report, The Future Shape of Financial Reports. The report offers an evolutionary approach to the reform of financial reports. The committee recommends that financial reports be written for the needs of users. The report also identifies five areas in which financial reports are unsatisfactory for providing information for decision makers, including a reliance on historical costs, too much emphasis on a single earnings number, and too much emphasis on legal form rather than the economic substance of financial transactions.

Accounting, auditing, & bookkeeping

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