BP’s directors may be forced to address the thorny topic of fair value
accounting once again, as its asset values face continual revisions.
Quarterly IFRS fair value fluctuations recently wiped off $400m (£207m) in
the value of the company’s assets, as BP had to calculate and recalculate the
value of the derivatives it holds. The company had only added the $400m to its
asset values in the previous quarter’s numbers.
In recent years BP’s AGM has been a tinderbox, with execs issuing scathing
broadsides against the restrictive regulatory climate.
Top brass used the annual summit last year to criticise the Companies Act, as
corporates protested against further tightening of the regulatory noose.
The fair value methods supplanted historical cost accounting when
international financial reporting standards were introduced for the bulk of
large UK corporates in 2005.
Whereas companies had valued assets according to how much they had paid for
them, IFRS made them look at what someone might currently pay for the assets.
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