News Article - 17 July 2007
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Trust in company management and auditors is necessary in relation to users of financial information, the Institute of Chartered Accountants in Scotland (ICAS) has said.

The institute was responding to a consultation held by the European commission on the effects of endorsing international financial reporting standard (IFRS) 8 - Operating Segments.

According to ICAS, the proposed standard has caused controversy, with some commentators claiming that it would allow business management to report on whichever company segments they choose.

The institute warns however that not endorsing the standard could eventually mean that a whole separate set of European standards must be developed.

"We must trust management to make judgements on the best way to present segmental information to give a true and fair view, and then trust the auditor to consider and challenge those judgements," said David Wood, executive director of ICAS' technical department.

The International Accounting Standards Board issued the standard last year with the aim of reducing differences between IFRS and the US' generally accepted accounting principles.

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