Oct 30
Mater on accounting regulation
Accounting regulation, you say: zzzzzzzzz. No. Listen. This is important. The wrong regulations strangle the companies you work for, the companies you invest in, reduce your choice in every area of life.
Professor David Myddelton spoke to the Annual Meeting of the Society for Individual Freedom on Wednesday evening, 27 October at the Westminster Arms. The title of his speech was “Accounting Regulation: A non-problem followed by a non-solution?”
Professor Myddelton supported the original UK standard requiring that company accounts present a “true and fair view” of the company’s position. Indeed, as he brought out, and later discussion underlined, if standards are compulsory, then it is necessary to have constantly expanding, incredibly detailed standards to cover all
circumstances, all industries. And then, what do you have? Why you still have a situation in which you have no guarantee against:
Although others might hold there is another issue, Professor Myddelton said it is very difficult to see where investors are damaged by poor reports. Investors do in fact have other ways of learning whether it is prudent to invest in or to continue to hold shares in a company.
Professor Myddelton would support reporting standards which are:
– based upon “true and fair view;” – voluntary;Standards on disclosure would be key to presenting a “true and fair view.”
And the Professor’s recommended standards also would apply only to traded companies. Small companies and not-for-profits would not be subject to additional standards.
The discussion touched only briefly on accounting regulation for government bodies on this occasion.
Professor Myddelton’s latest book is available from the Institute of Economic Affairs.
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