Tough time ahead for accounting

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NEXT year is set to a be a 'crunch' period for financial reporting, Sir Ron Dearing, chairman of the Financial Reporting Council, warns in the accounting watchdog's second annual review, published today.

He puts this down to mounting pressures on business and the Accounting Standards Board's attempts to deal with difficult issues of financial reporting.

The ASB has done great work on the development of an operating and financial review, which will help find a way through increasingly complex company accounts, he says. However, 'it is the responsibility of the directors to do better with the verbals'.

In the review, the ASB makes a commitment to issue the remaining draft chapters of its statement of principles and publish discussion or exposure drafts on off-balance sheet finance, mergers and acquisitions, acquisition accounting, goodwill, related party transactions and the valuation of assets by the middle of next year.

However, in order to pace the introduction of complicated new standards, only two of these are likely to appear in the year - on off-balance sheet financing and on accounting for capital instruments.