The long-term future of the UK’s Statement of Total Recognised Gains and Losses (STRGL) was put in doubt this week with the publication of a study by international standards-setters on how to report companies’ financial performance.
Published by the Accounting Standards Board (ASB) the research study recommends the development of a single performance statement divided into three components: operating (or trading) activities; financing and other treasury activities and other gains and losses. The third component is equivalent to a STRGL, but would present the items as part of a single statement.
The proposal was backed by a majority of the G4+1 working party of representatives from the Australian, Canadian, New Zealand, US and UK national standards boards, and the International Accounting Standards Committee.
According to ASB technical director Allan Cook the proposal addresses criticisms raised by the English ICA’s Financial Reporting Committee last November and would influence the impending review of FRS 3 Reporting Financial Performance.
‘The recent important proposal to differentiate operational and holding gains and losses is a step towards the style outlined in the report,’ said Cook. ‘Most of our critics accuse us of being obsessed with balance sheets. This recognises that people do read profit and loss accounts.’
The working party considered using simplified measures such as earnings per share, but decided against this route. ‘It’s a mistake to oversimplify performance summaries,’ said Cook.
For a copy of Reporting Financial Performance, telephone 01908 230344.
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