Monday, October 17, 2005

New Accounting Rules in the E.U.

"Is a Clear Picture of Corporate Health Being Obscured by New Accounting Rules?"
Financial Times
October 17, 2005

The European Commission recently developed new accounting standards (International Financial Reporting Standards or IFRS) to promote corporate transparency and allow investors to more easily compare accounting information across countries in the E.U. The new standards demand detailed public releases about the value of companies. The new system, however, has many critics, who argue that the volume and type of information requested is misleading and obscures the true status of disclosing companies.

Is there such a thing as too much disclosure? Is IFRS too complex for its own good?

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