Reporting of intangible assets hard in practice

A study conducted by experts from brand consultancy Intangible Business showed that five years after the inception of SFAS 41, the US equivalent of IFRS 3, companies that were following the standard were accounting for large chunks

of a deal's value as goodwill, when they should instead have been accounting for the components as intangibles such as brand value and other assets.

The vague accounting treatment means that companies may not know how much the companies they are buying are really worth.

Intangible Business director Thayne Forbes said: 'The overstatement of goodwill and the under-reporting of intangible assets is a common theme between IFRS 3 and SFAS 141.

'Sadly, there has been no improvement after five years of SFAS 141's implementation, which does not bode well for IFRS 3.'

IFRS 3 is built on the premise that a company makes acquisitions based on fair values and that, in many cases, book value may not be equal to fair value.

Further, the standard also recognises and assigns values to assets and liabilities which may not be reflected on the balance sheet of the company being acquired.

COMPANY REPORTS

SEC warns against localisation of IFRS

The US Securities and Exchange Commission has hit back at accounting regulators around the world who have tailored IFRS to suit their local markets.

'Regulators must beware the impulse to develop nationally tailored versions of IFRS,' said SEC chairman Christopher Cox at a corporate governance conference in Washington.

'We must co-operate with one another in implementing a set of standards that is faithfully and consistently applied,' he added.

Concerns have increased recently with the EU pushing to have the SEC accept its version of IFRS. Cox, however, cautioned against preserving national differences in accounting standards.

'In some cases, convergence and harmonisation are the best approach. In other cases, an intentionally different national approach is best; and sometimes simply offering investors a choice after full disclosure is the way to go,' he said.

Gittins wins Begbies AGM vote as FD

Shareholders have rubber-stamped the appointment of John Gittins as Begbies Traynor's new FD.

Gittins was most recently FD of Vertex Data Science between 1999 and 2007 and before that was group FD of UK support services company Spring Group, which he joined in 1993.

Graham McInnes, who has been FD since Begbies floated on AIM in September 2004, will remain on the board, but will take on the new role of corporate development director.

Begbies chairman Ric Traynor said: 'Graham McInnes' move, to concentrate his considerable knowledge on corporate development, will create opportunities for Begbies to continue to grow the range of services we can offer to our clients.'