The most powerful chief executive in the UK has launched a scathing attack on
international accounting standards, describing the new methods as ‘difficult’
BP’s Lord John Browne said the new standards failed to hold executives
accountable and made BP’s results unnecessarily complex. ‘Some would argue that
IFRS neither produces a record of the accountability of management, nor a
measure of the changes in the economic value of assets and liabilities. I would
agree with them,’ said Browne. ‘What IFRS actually does is make our results more
difficult to understand.’
Browne was speaking as BP announced record profits of $22.3bn (£12.7bn) for
2005, which were 30% higher than in 2004.
The group’s fourth quarter profits of £3.6bn, however, were 43% lower than
the third quarter as the volatility caused by IFRS bit into the accounts of the
biggest company in the FTSE100.
The oil giant’s CFO, Byron Grote, said that although the accounting impacts
were ‘unlikely to be material’ they could affect the results of an individual
segment in a given quarter.
‘Our fourth quarter result was adversely impacted by a number of factors
related to IFRS,’ Grote said.
He stressed that the volatility was a result of ‘asymmetric accounting’ that
affected profits, even though there was no economic exposure for the oil giant.
See results at www.bp.com
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