PracticeConsultingICAEW speaker pushes value accounting

ICAEW speaker pushes value accounting

Accountants should be the driving force withing the movement to value accounting, an expert has told the Finance and Management faculty of ICAEW.

Gary Ross, chairman of Intellectual Capital Services, said companies ‘chasing competitive advantage’ were beginning to embrace the intellectual capital process.

He said the gap between the replacement cost of a company’s balance sheet and the market valuation continued to widen and estimated that between 45% and 75% of the average company’s value was related to cash. The remainder is made up of the company’s intellectual capital, or ‘equitisation intangible assets’ – its ideas, people, processes and relationships.

Value accounting should be able to provide a reliable explanation of what lies beneath the market valuation in terms of the contributory intellectual capital, Ross said.

In response, Christopher Jackson, head of the ICAEW’s Finance and Management faculty, said the institute recognised the importance of ‘measuring and managing intangible assets’ adding that many members were already involved in these processes.

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Intellectual Capital Services

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