A sideways glance at a forward look
Article Abstract:
The Securities and Investment Board (SIB) has published a report, A Forward Look, that details its role in the implementation of the regulatory framework mandated by the UK Financial Services Act. The Act created a system in which self-regulatory organizations (SROs), overseen by the SIB, took over the responsibility for regulating the financial services industry. The SROs were desired by the financial services industry to preclude regulation by outsiders, but the SIB has rigidly exercised its regulatory authority over the SROs, denying them independence. The SIB insists that SRO rule books be identical to their own and retains primary responsibility for developing those rule books. The financial services industry pays for the system and might discontinue its financial support since the present system leads to duplication of effort, and a less expensive regulatory regime might be implemented by eliminating SROs and centralizing regulation under the SIB.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1990
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Goodwill - the case against ED 47
Article Abstract:
There is a consensus that the immediate write-off of purchased goodwill against a company's reserves was inappropriate, but the proposal of Exposure Draft (ED) 47 that purchased goodwill should be amortized during the period of its useful economic life is unsound from the point of view of accounting. The idea that goodwill can be treated as another asset, that it has a measurable life and diminishes in value over that life, is wrong. Purchasers of goodwill do not willingly let the value of goodwill dissipate, but attempt to maintain its value through further investment. Amortizing goodwill does not take into account the costs expended to maintain goodwill and causes a double charge to the profit and loss account. An acceptable alternative is capitalizing goodwill as a purchased cost on the balance sheet and maintaining a fair valuation of the goodwill.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1990
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