IC. Accounting

IC Accounting ^[4]

While IC Valuation does not necessarily turn Intangibles Assets owned by companies into monetary figures, IC Accounting is exactly such an attempt.

While the concept is attractive to the business community, financial executives, financial analysts and stock exchanges and an international accounting standard “IAS 38, Intangible Assets” was published by IASC in 1998, the subject is controversial within the accounting community. The accounting community do not see themselves as the relevant parties in taking the lead in developing and researching issues related to the complexities of Accounting of Intangibles.

IASC’s Secretary-General, Sir Bryan Carsberg said: “Knowledge about intangible assets, particularly how to value them, is still in its early days. IAS 38 reflects the current limits of this knowledge, focusing on reporting the cost of intangible assets. There is growing demand for further information on the value of intangible assets using financial and non-financial indicators, maybe not as part of the financial statements. Debates on the subject are very much alive. The IASC will watch the developments in this area and may do more work in the future when preparers and users have gained more experience on the value of intangible assets.”

“IAS 38” essentially sets out the boundaries , rather than extends the possibilities to capitalise intangibles. And accounting bodies are more comfortable in taking on the more conservative role of “Gatekeepers” (i.e. taking on the position to codified best practices) rather than taking on the role of pioneers in Intangible Accounting practices.

APICC obviously does not have all the expertise required to lead the discussion on this emerging field of Intangible Accounting (or IC Accounting). However, APICC might be in a position to play the role of one of the coordinators (e.g. along with Scottish IA Centre, other IC Centres and accounting bodies in mainland China and around the world) in the research and development of IC Accounting. One possible direction is to suggest that the business and accounting communities develop Intangible Accounting along the line of a management accounting tool, rather than a financial accounting standard reported in audited financial statements (compare the development of Activity Based Costing as a specialised branch of management accounting). The other possible direction is to move toward the direction of “Reporting”, rather than “Capitalising” IA (Intellectual Assets) and IC activities of companies in annual reports.

[4]Source: European Observatory on Intangible Assets, a projected by the European Commission in 1999-2000. http://www.ll-a.fr/intangibles