Financial reporting ill equipped to deal with intellectual capital

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ICAS research suggests current reporting models aren’t properly reflecting the non-financial information that makes businesses ‘tick’.

A newly discovered link between the disclosure of intellectual capital in financial statements and the cheaper cost of capital in the UK has sparked concern over the effectiveness of financial reporting mechanisms.

A new ICAS report has discovered that companies with higher levels of intellectual capital disclosure in their annual reports have cost of equity capital estimates up to 3% less than companies with lower disclosure levels.

In the traditional financial reporting model, investments in intellectual capital assets are either immediately expensed or arbitrarily amortised and are therefore not fully reflected in the financial st...

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About Gina Dyer

About Gina Dyer

I've been a journalist for four years, writing on a wide variety of topics from business and finance to travel, culture and celebrities. I began my career as an editorial assistant for Palladian Publications, a B2B publisher specialising in technical magazines for professionals in primary industries. I later moved into consumer magazines as a staff writer for French Magazine, a monthly travel publication aimed at Francophiles, and was part of the launch team for The Traveller in France, a quarterly magazine produced for the French tourist board. I was also a regular contributor to online travel portal Homesworldwide.co.uk, and later worked with customer publishers Future Plus as a freelance production editor, before joining Sift Media in January 2009. I am currently Deputy Editor of AccountingWEB.co.uk.

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