‘Accounting standards: the “too difficult” box - the next big accounting issue?’ A practitioner view

Barth (2022) addresses two topics that I think many of us would identify as the hot issues of the day. Technology is transforming our world, and there is plenty of research that shows that 90% of the value of the companies today is in the intangibles. The top ten business risks according to the World Economic Forum ’ s risks report are Environmental, Social and Governance (ESG) related, and that of course includes climate change. Information on these aspects is critical for understanding risks and the drivers of enterprise values today and it is therefore directly relevant to investment decisions. To me, the practitioner, accounting is not just about recognition and measurement in the fi nancial statements. It is about communication of decision-useful information. The key word is ‘ communication ’ , which enables investor decisions to be made in an informed, consistent, comparable way. This is not, therefore, a discrete dataset that we need. It is a continuum of information, from the state-ment of the purpose of the company, what it is actually setting out to do, its strategy, its governance, the targets that it sets for itself, the Key Performance Indicators (KPIs) it uses to measure progress against those targets, and ultimately the results for the reporting period, which would only make sense if they are set in that broader context. Some of this information is captured in monetary values of course, such as the numbers in fi nancial statements, some through performance and non- fi nancial metrics, and some through the narrative disclosures that provide context for the numbers or explain the numbers and how they have been derived.