A ‘bottom line’ earnings figure of some kind will always be retained, an
International Accounting Standards Board member has said, as rows over changes
to corporate income statements flared this week.
Jan Engström told Accountancy Age that plans to revamp the income
statement would merely see a ‘new type of bottom line’ emerge if implemented,
rather than do away with it.
A group of investors,
the corporate reporting
(CRUF), this week
wrote to the IASB objecting to proposals to draw up a more comprehensive
earnings figure ahead of a report into the issue by the board.
The letter said: ‘We disagree with the proposal that there should not be an
earnings sub-total within a performance statement. We find an earnings sub-total
particularly useful in enabling management to communicate with us.’
Among proposals mooted in recent months have been the idea of a comprehensive
income statement encompassing all balance sheet movements. This is regarded as a
radical suggestion, even by insiders at the IASB, and investors fear it would
make it more difficult to compare underlying performance in companies.
Engström said the proposal was at ‘the most drastic’ end of possiblities.
Companies also back CRUF’s concerns, saying the figure is important,
according to research by PricewaterhouseCoopers set to be published soon.
A total of 85% of corporate respondents and close to 80% of investment
professionals found earnings numbers to be useful, while 60% of both corporate
respondents and investment professionals did not think that ‘other comprehensive
income’ is a useful number.
The IASB is set to issue a report into the income statement early next year.
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