Concerns about implementation of IFRS 3
07 Jan 2010
The United Kingdom Financial Reporting Council (FRC) has issued a study Accounting for Acquisitions examining the quality of accounting and reporting under IFRS 3 Business Combinations.
Companies told the FRC that acquisition accounting is costly and difficult, and at the same time investors said that the resulting information is not useful.
| The FRC found that IFRS 3 "has been poorly applied by companies due to unfamiliarity with its requirements and the complexity of valuing intangible assets such as brands and customer relationships". The study found that companies had "provided insufficient or inconsistent information about material acquisitions in their audited accounts when compared to the rationale for these acquisitions and supporting explanations given in their business reviews". |
The FRC intends to follow up on this study over the next 18 months and to provide feedback to the IASB. The FRC is the UK's independent regulator responsible for promoting confidence in corporate reporting and governance.
Click for the Accounting for Acquisition study (PDF 223k).
