R&D disclosure: SSAP 13 and after

Article Abstract:

There is much debate about why there is so little industry R&D in the UK. Business people claim that the lack of R&D is the result of the focus by investors on short-term results and the need to protect the company from takeovers. A report by the Department of Trade and Industry states that the low levels of R&D are the result of the focus of investors on short-term results, which is bolstered by practices of major institutions. Statement of Standard Accounting Practice (SSAP) 13 was modified to call for the disclosure of R&D expenditures on corporate financial reports in order to improve communication between business and investors and to promote an understanding of the long-term benefits of R&D among the investment community. Improvements to the measurement and disclosure of R&D on balance sheets, such as distinguishing between low risk development and high risk research, would promote a wider appreciation of the necessity of R&D.

Accounting, auditing, & bookkeeping, Analysis, Reports, United Kingdom. Department of Trade and Industry, Investor relations

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Strategy and culture - bridging the gap

Article Abstract:

Management has four options when confronted with a mismatch between existing corporate culture and one implied in a new business strategy: ignore the culture, change the strategy, change the culture to match the strategy, or try to modify both culture and strategy to increase their compatibility. There are five points of general agreement on changes in corporate culture: it is very difficult to accomplish; it can change only when corporate leaders persevere; it probably will not change unless the current culture is upset by a major crisis or event; it is necessary to use as many levers as possible to effect the change; and there is no one method for effecting cultural change that will work equally well in all firms at all times. Staff changes, reward systems, and management styles are also discussed.

Social aspects, Management, Corporate culture

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Accounting for R&D: the need for change

Article Abstract:

UK business must commit more resources to research and development (R&D) if they are to remain competitive internationally. However, accounting practice in the UK negatively impacts on the R&D expenditures of UK industries by allowing business to portray R&D as a cost rather than as a strategic asset. Most companies choose to write off R&D expenses immediately due to the strict criteria set by Statement of Standard Accounting Practice (SSAP) 13, Accounting for R&D, for a project to qualify for an accounting treatment that carries forward and amortizes R&D expenses over the expected period of benefit. Revising SSAP 13 is necessary to discourage the immediate write-offs and encourage the accounting treatment of R&D expenditure.

United Kingdom, Finance

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