The Association of Chartered Certified Accountants (ACCA) and Deloitte conducted a joint study on the difficulties of intangible assets reflection in accounting and financial reporting.
The main problem is that the market determines intangible assets as valuable ones, and they are not reflected in financial reporting as assets at all.
According to the study, 77% of companies make records on the research work in their financial reporting, and 62% immediately write off those expenses in order not to account them as investments.
The intangible assets reflection in accounting and reporting differs in European countries. Austrian, German, Greek, Swiss and Finnish companies prefer to write off intangible assets at expenses.
Richard Martin, head of the corporate reporting department and one of the leading ACCA authors, said: “Intangible assets can include the value of manpower, know-how, relationships with customers, brands, and the development of new products. International Financial Reporting Standards define a limited range of assets that are indicated in the financial reporting. And the very issue causes the problem. There is no hint at the fact that the issue of non-compliance is being solved, therefore this should be placed more focus on. ACCA will hold briefings, public consultations and will require updated guidelines for the preparation of non-financial reporting” – the expert said.