Guest Post: Michael Mard, President, The Financial Valuation Group (www.fvginternational.com)
The world of accounting is changing. In fact, it’s standing on its head! It will change the way we prepare our external financial statements provided to bankers and other interested parties. It will change the types of services you will need from your accountant or corporate finance advisor.
Bob Herz, the Chairman of the Financial Accounting Standards Board (the guys who set the rules for accounting), was interviewed in the February, 2008 issue of the Journal of Accountancy (http://www.aicpa.org/pubs/jofa/feb2008/robert_herz_interview.htm). In the interview, Bob talked about the convergence of world wide accounting standards, which is the blending of the U.S. Generally Accepted Accounting Principles (or GAAP) with the International Accounting Standards Board’s International Financial Reporting Standards. The coordinated effort will create more relevant information for the users of the financial statements, like banks and shareholders.
Now, while all that is interesting (perhaps), here is what caught my eye: in the middle of the article Bob talked about Enhanced Business Reporting providing key non-financial performance indicators. Specifically, Bob said: “… to understand a company’s performance and also understand where the company is going you need more than financial reporting. You need EBR (Enhanced Business Reporting). You need the key non-financial performance indicators. You need to put those in the context of the company’s strategy. Those will give you a much richer idea of what’s going on in the company and also those are often leading indicators to its future financial performance.”
The future is here: Financial statements reporting the company’s non-financial performance. The world of accounting is standing on its head!!
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