IASB to tackle ‘aggressive accounting’

IASB to tackle 'aggressive accounting'

The International Accounting Standards Board this week announced its intention to tackle the quagmire that is revenue recognition, otherwise known as 'aggressive accounting' - when companies artificially inflate their profits through improper accounting practices.

The news will bring some respite to the investor community where confidence has plummetted following the discovery of widescale fraud at the US telecoms giant WorldCom and from fallout due to the Enron scandal.

The decision comes as part of the IASB’s new work programme which will also look at business consolidations, including special purpose entities, which contributed to the fall of the US energy company Enron.

Other topics include accounting for pensions, income tax, segment reporting and revaluations.

The UK’s Accounting Standards Board and its Auditing Practices Board last year kick-started the debate on revenue recognition after it warned that the growing trend used by many US companies could begin to permeate the UK market.

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