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The "top company valuations" top of page is also interesting(PDF file)

Not surprising IMO,
The financial reporting model no longer works - at least with respect to intangible assets. That's the consensus among CFOs, but many of them are finding it difficult to come to terms with the changes they know are needed. Based on book values, which are not aligned to market values, the model fails utterly to provide the much-needed aerial shot of a company's true prospects. Just take a look at the recent PricewaterhouseCoopers Corporate Value Report 2001, compiled by partner, corporate finance, Richard Stewart. Analysis of 200 companies reveals that for more than 60 per cent of listed companies, intangible assets make up half of their market capitalisation.

Sounds like a whole lota fun,
Most CFOs would rather have root canal treatment than go through the process of dividing goodwill into classes. The new consolidation tax has got most of them cringing, and that's a walk in the park compared with what is coming up. 'Finance here is not really keeping up with the accounting profession. In the US, the CFOs are capable of much more complex and detailed analysis,' says Smith. Getting a true fix on how to treat intangibles ranks among the toughest tasks facing an Aussie CFO today. And it gets a whole lot worse.

The battle between USA/UK accounting standards,
Smith, for one, is less than thrilled that the AASB is seriously considering booking non-acquired intangibles and allying ourselves with Europe 'There will be a conflict in accounting in the next five years, because the Europeans will set rules and regulations that differ from the US, and I honestly don't believe those two will be comparable. Do we want to line up with Germany and France against the US?'

This kind of pragmatism makes sense. And it's true that harmonisation seems a long way off. Even the IASB differs from FASB on revaluation, and whether a unit should report on structure or cash generation. For Smith, the issue is a lot bigger than the treatment of intangibles. He shudders at some of the things it does, or doesn't do. 'We dish out options at a massive discount, taking value away from shareholders and neither disclosing, nor recording, it as an expense.'

Hinton will tell you the US rules are too prescriptive, the impairment test too onerous, and don't recognise the difference between service and other companies. 'FASB 141 and 142 should be adopted wholesale,' argues Smith. 'It's well-documented, well-researched and it is supposed to be prescriptive,' he says. 'For ages the US has had more disclosure and reporting than anywhere else on the planet.'

Jeff Carter, CFO of Agenix, also views Australia's alignment with British standards with some alarm. 'Why else would companies like us look at doing an American Depository Receipt? It's because US investors are more informed. Of course, it will be the US standards that will drive business. How many companies are going to the UK?'


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