Protest against scrapping ‘bottom line’ figures

A high-profile group of financial analysts has protested against drastic
proposals by accounting regulators International Accounting Standards Board
(IASB) and its USA’s Financial Accounting Standards Board (FASB) to scrap
bottom-line earnings figures from financial statements, saying it would be
detrimental to investors.

The Corporate Reporting Users’
Forum (CRUF), made up of senior research analysts from banks and fund
managers, including Deutsche Bank, Merrill Lynch, Lehman Brothers, Fidelity and
Hermes, said in a letter to both
IASB and FASB they
disagreed with the proposal not to state an earnings sub-total in a performance
statement.

‘We find an earnings sub-total particularly useful in enabling management to
communicate with us,’ the group said. ‘A key step in our evaluation of companies
is to forecast the future cash flows of the business.

‘To achieve this we require clear and easily accessible data on the
historical underlying operating income and costs of the business. In particular,
we need to be able to identify quickly the elements that represent operating
performance.’

Further reading:

Next IFRSs unlikely before end of 2007

Half-year reports are set to be longer – KPMG