IFRS 3 is failing to work because it is being ignored by many FTSE 100 companies, claims a new report.

Research from brand valuation company Intangible Business revealed that the use of IFRS 3, which aims to improve the transparency of how firms report mergers and acquisitions, is not enough because many companies do not fully explain goodwill payments.

Since the introduction of the new standard at the end of 2005, the total amount of goodwill arising from acquisitions of FTSE 100 companies accounted for 53 per cent of the total value of such deals â€" reaching around £21 billion.

Intangible Business believes that many companies could be ignoring the full implementation of IFRS 3 by failing to further breakdown these goodwill entries.

The company's joint managing director Thayne Forbes explained: "The FTSE 100 spent £40 billion of shareholders' money on acquisitions last year and failed to explain what over half of this expenditure was for."

He added: "IFRS 3 was designed to demonstrate to investors how their money was being spent on acquisitions. Our research clearly lays bare the fact that the UK's major companies, from banks to retailers and insurance companies to TV networks are systematically failing to comply with IFRS 3."