21st Century Accounting
Financial Accounts are meant to be a communication tool, but, as they become longer and more complicated, investors, lenders, creditors and management are losing confidence in them.
The basic structure of accounts was determined in the 19th Century, in an era of historic cost accounting.
Accounts need to be brought into the 21st Century, so that they can communicate effectively both backward looking and forward looking approaches to measurement, and the increases in uncertainty that result from a mixed measurement model.
Whether accounts can still provide a “true and fair” view is increasingly under question.
A step change is required, rather than further tinkering with an obsolete model.
The pamphlet below has some ideas about how communication can be improved.