Intangible Business, the world's leading independent brand valuation consultancy, has published exclusive research revealing for the first time how the 100 biggest companies in the US accounted for acquisitions under SFAS 141 since its introduction in 2002.

The report, ‘SFAS 141: The First 5 Years', reveals that despite an estimated $1 billion spent on compliance, of the $1 trillion spent on acquisitions by the S&P 100, $290 billion (28%) was allocated to identifiable intangible assets such as brands, and $490 billion (48%) was unaccounted for in goodwill. Despite five years of implementation there has been no change in the transparency of reporting - the purpose of SFAS 141.

Last year Intangible Business unveiled similar findings in its report into the first year of IFRS 3 - the European equivalent of SFAS 141 - which showed that £21 billion (53%) had been allocated to goodwill from the FTSE 100's acquisitions. As this was the first year of IFRS 3's adoption the report gives hope that the UK will learn from the issues identified from the process.

The key findings from ‘SFAS 141: The First 5 Years', which includes a number of examples where the standard has not been properly applied, are:

• $1,033 billion spent on 212 acquisitions by the S&P 100 between 2002 - 2006
• $490 billion has been unaccounted for in goodwill (48%)
• $290 billion has been allocated to intangible assets (28%)
• $1 billion is estimated to have been spent in compliance with SFAS 141
• No improvement in the reporting after five years.

Thayne Forbes, joint managing director of Intangible Business says: "The purpose of accounts is to account for what's been earned and what's been spent. With half of what's been spent on acquisitions unexplained, the entire purpose of the accounts is undermined. The estimated $1 billion that's been spent on compliance with SFAS 141 is a further slap in the investors face."

Forbes added: "A key difference between US and European standards is that goodwill should be explained under IFRS 3. In this respect IFRS 3 is a step forward from SFAS 141. In reality, however, there is little difference as both standards are effectively unenforced and ignored. Goodwill is capable of meaningful analysis but is just written-off as too complex."

Forbes continues: "Why has it been left to us to discover this colossal vacuum, into which half a trillion dollars of investors' money has disappeared? The overstatement of unexplained goodwill and under-reporting of explained intangibles goes against the intention of both standards yet no-one is batting an eye-lid. Regulators, financial standards authorities, accountants and all of us in the industry should take up this challenge and improve the quality and transparency of reporting and put an end to this new era of creative accounting."