Business reporting of intangibles: realistic proposals

ACCA welcomes the opportunity to provide views in response to the FRC’s Discussion Paper on the business reporting of intangibles. This has been done with the assistance of members of ACCA’s Global Forum for Corporate Reporting.

Comments from ACCA on a Discussion Paper issued for comment by the Financial Reporting Council in February 2019.

The issue of the reporting of intangibles is a very challenging one and merits more attention that it currently receives. So we welcome FRC’s paper in addressing it. On the one hand intangibles are of growing importance in corporate activity and on the other they do not fit very well in the current financial reporting model and other narrative forms of reporting of them could be improved and made more comparable and consistent.

We agree with the paper’s promotion of better disclosures and narrative reporting of intangibles.

However the recognition of intangible assets cannot be ignored. The diverse nature of intangibles and the distinction between tangible and intangible items should be more fully explored, especially as concerns their recognition as assets. Arguably this paper moves too easily to the conclusion that in most cases recognition as assets is not a desirable way forward. In our view greater recognition of the investment in intangibles should be part of any reconsideration of the reporting of intangibles. It is a fundamental approach of accounting and financial reporting that expenditure to benefit the performance in future periods should be distinguished from that which is consumed in supporting current performance.

Download the full consultation response below.