Financial asset marking 'causing anger'

News Article - 03 September 2007
Category: Business

The growing trend of marking financial assets in company accounts is making some parties "cross", it has been claimed.

According to a report in the Financial Times, volatility in markets is causing balance sheets to become distorted once these assets are figured in, leading to confusion and anger among some parties.

One concrete example cited of this is Goldman Sachs, the pre-tax profits of which were up by about ten per cent due to alterations on the earnings statement.

"A further self-reinforcing effect might occur with pension funds," stated the author.

"Their assets and liabilities are now marked to market and a modified form of that is put through the earnings statement."

However, he also noted that some of those angered by the shift in accounting may be parties opposed to the unification of US and international standards.

The Institute of Chartered Accountants of Scotland recently said that trust is key factor if the International Financial Reporting Standards 8 are to be accepted.

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