Annual reports have become “absurdly lengthy” and “virtually incomprehensible” according to a senior professor, who has accused accounting standard setters of doing away with prudence.
Professor David Myddelton, professor of finance and accounting, at Cranfield School of Management, has taken aim at the international accounting standard setter, which he claims has abandoned prudence as a core accounting principle.
He described accounting standard setters as “ultra-theoretical” and said that they had “jettisoned prudence”.
Myddelton made the comments in a letter to the Financial Times , in response to an earlier comment by Bournemouth University professor Stella Fearnley, who accused the International Accounting Standards Board (IASB) of doing away “with the principle of prudence”.
Myddelton believes the IASB’s approach has led to lengthy annual reports which are difficult to understand.
“What a pity that ultra-theoretical standard-setters around the world have chosen to jettison prudence, a generally accepted accounting convention derived from more than 100 years of experience,” he said.
“This high-risk approach has led to absurdly lengthy and unrealistic annual reports that are now virtually incomprehensible.”
Thank God somebody has at last stated the obvious.
Posted by: Jim Carpenter, 24 Aug 2010 | 00:00
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