What does the ASB think are the biggest problems in financial reporting today?
It would be foolish to single out one issue, or even several issues, as being “the biggest problems in financial reporting today”, but there are several topics that must be mentioned in any consideration on this point. Financial instruments-including derivatives such as forward contracts and swaps-are clearly one of these. The number and complexity of these instruments has grown hugely in recent years and has outpaced innovations in accounting practice. One of the problems in this area is that instruments can be acquired for small cost, and yet their value can quickly change leading to large profits and losses. Under present accounting practice these profits and losses can go unreported until the instrument is settled. There is also no clear answer in present practice to the many questions that arise in connection with hedge accounting-ie departures from normal accounting that are made because it seems to be necessary to reflect the intent underlying the transactions. There is no consi
