The department for culture, media and sport has recommended the ICAEW undertakes a review of the balance sheet treatment of intangible assets, with a view to establishing more appropriate rules to deal with valuation and auditing of music copyrights.
The recommendation was made in The Funding Dilemma for Britain’s Music Businesses undertaken by Kingston University’s Small Business Research Centre, looking at the problems faced by small business in the music industry in accessing finance.
Nick Wilson, principal researcher and co-author of the report, said the way intangible assets were recorded on the balance sheet made a difference in terms of valuation of the business.
‘Currently a manufacturing view is taken when valuing intangible assets, which is not appropriate. A different treatment is needed,’ he added.
In addition, the report said government support for SMEs has largely been designed with the manufacturing business in mind.
According to Wilson, the government was set to undertake the review itself, but had suggested that that the ICAEW conduct it instead.
In essence, the review will look at the way music ‘catalogues’ are valued and will essentially be a copyrighting issue.
The report, which included interviews with over 300 music businesses sought to identify the finance options available to SMEs, the barriers to accessing these options and the ways in which industry and government might best overcome these barriers.
Other recommendations in the report call for an improved the ‘level of understanding’ between the music industry and finance providers, better marketing of regional financial initiatives and new financial instruments including credit and loan facilities such be encouraged.
It also said the government and the industry should ensure small businesses had easier access to investors and corporate venture funding.
The report calculated the value of UK music industry to the economy at Pounds 3.2bn with Pounds 1.3bn earned through exports.
A spokesperson for the ICAEW said the institute was ‘please to have been recommended to conduct the review’ She added: ‘The DCMS had been contacted with a view to setting a up a meeting to discuss the the review.
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