INTHEBLACK November 2025 - Magazine - Page 43
When the accounting standard
for intangible assets was
launched 25 years ago, digital
assets were in their infancy.
IAS 38, Australia’s AASB 138
and versions of the standard adopted
in other countries, set out the criteria for the
recognition of intangible assets, their measurement,
amortisation, impairment and disclosure requirements
in financial statements.
Yet, most experts would agree that the intangible
assets standard has now become outdated, particularly
considering the huge advances in information technology
that continue to transform company operations
around the world.
To address the issue, the International Accounting
Standards Board (IASB) is undertaking a comprehensive
review of IAS 38 in order to improve the usefulness
of the information that entities provide about intangible
items in their financial statements. The IASB also intends
to update the standard to make it more suitable for
contemporary intangible items and the new ways
of using them.
As part of the global project, the IASB has initially
decided to explore user needs for information about
The International Accounting
Standards Board is now
undertaking a detailed review
of IAS 38 Intangible Assets.
At stake are trillions of dollars
worth of intangibles that
companies currently do not
recognise in their balance sheets.
recognised and unrecognised intangible assets and
expenditure associated with them in financial statements.
It is also considering whether to update the definition
of an intangible asset, associated guidance and some
aspects of the recognition criteria, particularly in relation
to newer types of intangible assets.
A BLIND SPOT FOR INVESTORS
Frances Drummond, a principal of IP Advisory
at Deloitte, says the undisclosed value of intangible assets
on company balance sheets is huge — and growing.
Internal research by Deloitte has found that an
estimated A$1.6 trillion of assets are effectively missing
from the audited financial statements of the top 100
companies listed on the Australian Securities Exchange
(ASX). Across the whole of the ASX, the number is
likely to be at least double that, Drummond notes.
This is a major blind spot for investors
because they are unable to see the real
value of the companies they are
investing in.
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