In the USA, accountants have ten clear accounting principles they call GAAP: Generally Accepted Accounting Principles. [1] In the UK and elsewhere, principles mean something else. In the UK for instance the Financial Reporting Council, the FRC, who set UK standards for accounting have invented ‘pervasive principles’ [2] completely different to American principles. These are…
In the USA, American accountants know the ten accounting principles known as GAAP, Generally Accepted Accounting Principles which are part of the rules set by the Financial Accounting Standards Board (FASB). ‘Generally accepted’ is an odd expression to use. They should be accepted totally but why only generally. What, I wonder, are the parts that are…
Let’s take seven well known companies’ financial statements and see what they say about EBITDA. Amazon, GSK (GlaxoSmithKline), and Johnson & Johnson do not have EBITDA in their 2021 annual report at all. Roche, in their 2021 annual report, recognise my claim that EBITDA is not used by companies as a measure in their financial…
Now why would accountants calculate net profit, reverse part of the calculation, give it a name: EBIT, and not include it in the financial statements? Companies do not include EBIT in their financial statements because they don’t use it as an internal measure of profitability. Accountants outside the company use it to compare the…
The Irish Institute believes that their members become accountants to “lead in business”. In England and Wales accountants are a “force for change”, whereas the motivation to become a management accountant, CIMA is to “drive organisations forward”. One of my favourites comes from the Scottish Institute: “to have a rewarding career in business and beyond”….
I recently found my signed copy of the six page formal “Articles of Clerkship” way back in January 1967 as part of my effort to become a qualified chartered accountant. Today this forced period of work is called ‘in-depth accountancy training’ or a training agreement, placement or internship. After my A levels, my parents lived…
Accountants invent the fictitious position of Chief Operating Decision Maker in IFRS 8. To apply the standard, accountants must then search for the people holding this position, but only in every company preparing financial statements under IASB standards. He or she can be found by detecting managers who review operating results, regardless of their official…
The International Accounting Standard Board sprinkle their standards with the threatening phrases of ‘if, and only if’ and ‘when, and only when’. The threat though is a hollow one. What happens to an accountant who doesn’t follow their emphatic instruction? They never explain. Because there are no consequences. The champion of ‘if, and only if’…
I became suspicious in my very first read of the Endorsement Criteria Assessment [1] on page 11 when I read the term ‘holistic approach’. What is a holistic approach, I thought, as I reached for my Oxford English Dictionary? Holism is a term used in medicine, psychology and philosophy, which as far as I could…
Most accountants don’t know (and perhaps don’t care) because of Brexit the UK no longer needs to follow new standards issued by the International Accounting Standards Board (IFRS). The United Kingdom Endorsement Board or UKEB, as it is now known, was set up to “influence, endorse and adopt new or amended international accounting standards… ”…