International Financial Reporting - another step backwards
Although IAS-14 is deeply flawed, the new standard is another step backwards: it moves further away from clear geographic reporting and gives huge discretion to company managements on how to report financial data. When geographic reporting requirements are so weak, companies can, for example, sweep all their financial data from a range of countries into one regional grouping (such as "Africa",) making it impossible to unpick the data for individual countries. This enables wide-ranging corruption, tax dodging, and other skulduggery. It happens every day. What TJN would like to see is far more radical: complete country-by-country reporting.
Now Charlie McCreevy, European Commissioner for the Internal Market, has just endorsed the harmful IFRS-8 standard , in the face of protests from a wide variety of groups not only from civil society (such as the Publish What You Pay umbrella) but also from major investment bodies such as the Investment Management Association in the UK. This is another giant step backwards. McCreevy is a trained chartered accountant, and he knows exactly what he is doing here: given his past form, TJN is not surprised that McCreevy took this position. As the Financial Times reports: "some had claimed the 'management approach' of IFRS 8 would allow executives to hide the truth and that it would make comparisons between companies more difficult." Thankfully, as Richard Murphy reports, the European Parliament still has to look at this proposed change.
Let's hope that they scotch it.