Leader – 17 September

English ICA president Chris Swinson is not noted for ducking a fight. And last week he ploughed straight into one over company reports. In arguing that reports must come up to date and meet the real needs of those who use them, he has struck another blow for real accounting.

Historical-cost accounts certainly serve a purpose. But in today?s world they are closer to the valve radio than digital TV. The result is that real business decisions are increasingly made on the basis of unverified data gathered from informal sources. The auditor may have signed off the Companies Act report, but that gives little comfort to stakeholders in a real-life dynamic business.

It was fitting that Swinson should launch his plea for sanity in the same week the Treasury appeared to back down in its confrontation with the Accounting Standards Board over the private finance initiative. The ASB had the temerity to suggest PFI deals should conform to the same accounting rules as any other transaction. It was privately attacked for its pains by a government terrified that telling the financial truth about the PFI deal would frighten off potential private-sector partners.

ASB chairman Sir David Tweedie stuck to his guns and has been vindicated. Although Chris Swinson was only launching a debate, he is already being attacked for even daring to raise the issue. Thankfully, he is unlikely to be deflected. Real accountants need to stand up for real accounting.

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