Proposals to change the emphasis of international accounting standards have been emphatically rejected by the IMA in a letter to the International Accounting Standards Board and the Financial Accounting Standards Board on the basis it would increase exposure to risk among its members and raise the cost of being a shareholder.
At stake is the shift from a so-called ‘parent concept’ to one known as ‘entity concept’. The IMA says the shift would result in an increase in opaqueness of accounts relied on by shareholders – whether they be institutional pension fund managers, or retail fund asset managers – to make investment decisions. Under the parent concept, assets and liabilities of an entity, even where it is not fully owned (e.g., a subsidiary) are consolidated in full, while minority interests (non-controlling interests) and transactions with non-controlling interests are identified separately in the account...
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