RegulationAccounting StandardsIASB has abandoned prudence, professor warns

IASB has abandoned prudence, professor warns

Annual reports have become "absurdly lengthy” professor claims

Annual reports have become “absurdly lengthy” and “virtually
incomprehensible” according to a senior professor, who has accused accounting
standard setters of doing away with prudence.

Professor David Myddelton, professor of finance and accounting, at Cranfield
School of Management, has taken aim at the international accounting standard
setter, which he claims has abandoned prudence as a core accounting principle.

He described accounting standard setters as “ultra-theoretical” and said that
they had “jettisoned prudence”.

Myddelton made the comments
in
a letter to the Financial Times
, in response to an
earlier
comment by Bournemouth University professor Stella Fearnley
, who accused the
International Accounting Standards Board (IASB) of doing away “with the
principle of prudence”.

Myddelton believes the IASB’s approach has led to lengthy annual reports
which are difficult to understand.

“What a pity that ultra-theoretical standard-setters around the world have
chosen to jettison prudence, a generally accepted accounting convention derived
from more than 100 years of experience,” he said.

“This high-risk approach has led to absurdly lengthy and unrealistic annual
reports that are now virtually incomprehensible.”

Further Reading:

Return
prudence to accounting

Move
to converge just exported crisis

Related Articles

IASB overhauls insurance accounting with issuance of IFRS 17

Accounting Standards IASB overhauls insurance accounting with issuance of IFRS 17

5m Alia Shoaib, Reporter
Former CFO joins IASB board

Accounting Standards Former CFO joins IASB board

11m Stephanie Wix, Writer
MEP calls for IASB pay cuts

Accounting Standards MEP calls for IASB pay cuts

1y Richard Crump, Writer
Indonesia set to achieve full IFRS convergence

Accounting Standards Indonesia set to achieve full IFRS convergence

1y Calum Fuller, Reporter
FASB publishes US leasing standard

Accounting Standards FASB publishes US leasing standard

2y Calum Fuller, Reporter
IASB issues amendments to insurance contracts standard

Accounting Standards IASB issues amendments to insurance contracts standard

1y Richard Crump, Writer
IASB chairman Hoogervorst to prioritise communication effectiveness of financial statements during second term

Accounting Standards IASB chairman Hoogervorst to prioritise communication effectiveness of financial statements during second term

1y Richard Crump, Writer
IFRS Foundation to cut board size and improve transparency

Accounting Standards IFRS Foundation to cut board size and improve transparency

1y Richard Crump, Writer