Accounting for acquired intangible assets can be a minefield. There are financial authorities to satisfy, auditors to convince, standards to comply with, updates, revisions, exposure drafts and international variances to negotiate. The business ramifications can be significant.
Accounting for intangibles has never been more topical, especially as M&A activity is set to increase. The Financial Reporting Review Panel (FRRP) can name and shame individual companies for their failure to adequately report and for the first time last year it did so for a company failing to identify intangibles. The Financial Reporting Council (FRC) is also targeting accounting for intangibles. In January 2010, it published a study into how 20 listed companies accounted for acquisitions, 'FRC Study, Accounting for Acquisitions'. It concluded that ‘overall, the results were disappointing’ and that there ‘is a need for improved compliance’. It wants directors to consider accounting for acquisitions more carefully and flagged that the revised IFRS 3 should lead to a step change in the recording of intangible assets. To counterbalance this many users of accounts find IFRS 3 to be uninformative.
Intangible Business is highly experienced in valuing intangible assets for compliance purposes. ‘Accounting for Intangibles: A Checklist’ is designed to outline the key issues involved and answer the most common questions we are asked and issues encountered.
