Merger accounting: is laxity distorting the market?

Article Abstract:

The credibility of the British accounting profession may depend on government intervention against merger accounting's abuses of Statement of Accounting Practice 23, which governs the ways firms account for acquisitions and mergers. Central to current controversy is the major difference in predator firm financial effects, depending on whether traditional acquisition accounting rules or more liberal merger accounting regimes are employed. Goodwill is created under acquisition accounting, which must then be written off. Merger accounting brings the assets of merging companies into accounts at book value, and goodwill does not arise. The desire to avoid goodwill is presented as one of the key driving forces stimulating abuse of merger accounting rules.

Methods, Acquisitions and mergers

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More tales of Dearing-do, please

Article Abstract:

The Financial Reporting Council (FRC) needs to enhance its financial reporting capabilities to provide a more extensive disclosure of its financial performance. The FRC's state of the union address provides the public with very little information as to the future prospects of the agency. Both the FRC and the Accounting Standards Board lack internal standards and a basis for gauging progress. Goals can be facilitated by improving existing accounting standards and by making objectives known to the public.

Professional organizations, Management, Laws, regulations and rules, Public finance, Accounting Standards Board, Corporation reports, Company reports

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The Dearing Report: blueprint for a sound system

Article Abstract:

The Dearing Report, commissioned by the Consultative Committee of Accountancy Bodies, investigates the idea of creating accounting standards. The report provides a complete analysis of the present regulatory framework and a group of proposals to improve the framework. It stresses that standards of accounting should remain the responsibility of auditors, although there is a need for government to introduce legislation to facilitate the published financial reporting system.

Standards, Analysis, Financial research

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