Time to revisit the G in GAAP?

Please find below the slides of the presentation I was invited to give today to the Swissholdings Expert Group Financial Reporting and Accounting. The Expert Group was interested in my perspective on standard setting and in how the Analyst Representatives Group to the IASB works.

It was a great opportunity to explain the mindset of users / investors to a group of highly competent preparers across industries. What struck me most was the concern voiced over lunch that what users are mostly interested in - which is performance reporting from a value perspective - is not what accountants / preparers feel comfortable giving. Their (idealised) concept of financial reporting is based on the general ledger and delivers a summary of past events in compliance with the regulatory framework. Obviously there is a major disconnect between that concept and the kind of forward looking, value based financial reporting that investors are looking for.

Perhaps it really is time to revisit the G in GAAP in the sense that Generally Accepted Accounting Principles designed to fulfil the needs of a number of stakeholder categories are simply becoming too unwieldy and too complex to manage and maintain. At the same time, technology is available today (XBRL) to give us multiple, tailored views of the same underlying economic reality to address the specific needs of the different stakeholder groups separately. What may be required then, however, is a set of interlocking SAAP - Specifically Accepted Accounting Principles which cater to the needs of their respective audiences, to wit: Regulatory AAP, Investor AAP, Environmental AAP, Tax AAP ...