The upside of FRS 17

Yet last week international airport group BAA reported an operating profit of Pounds 355m under the new controversial accounting standard.

BAA is one of the few companies that has opted for early adoption of the new accounting rule, which takes effect in stages until 2003.

Admittedly that same result would have been some Pounds 19m higher pre-FRS 17. But that’s hardly the volatility we were warned about. And that came in a depressed market.

But is there anything wrong with the fundamental principle of using market valuations? Who knows, perhaps we will hear fewer warnings of ‘volatility’ once the stock market recovers.

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