International Accounting Standards

I've just started to learn the deep details and practice of IGAAP.

When starting on this IGAAP journey, it is normal to feel any (or all) of the following:

• nauseous?

• feeling that IGAAP is really missing the whole point about accountancy?

• misleading the investors, or anybody else who uses IGAAP accounts?

• spotting discrimination within a standard?

• spotting inconsistencies between standards?

• excessive - and specious - complexity (presumably to keep lawyers in jobs) at the cost of intuitive/layman users?

• a feeling that you would never want to sign a set of IGAAP accounts, because compliance cannot possibly be true or fair?

I've had a quick look at IAS 2 (Inventories), IAS 11 (Construction contracts) and IAS 14 (Segmental reporting) so far. In each case, I feel that financial reporting is heading back to the antediluvian split-hairs of the 1950s, rather than something more useful for the

IAS 11 goes on about the need to pigeon hole a "type" of contract, to determine which random/arbitrary procedures to apply to its numbers. Objectively, all that is required is to apportion cost with revenue over obligations performed, less any overwhelming losses. But that's too simple for IAS 11. Much better, apparently, to over-complicate things and obtain perverse results. At least, that's what it looks like. How a lay investor could handle this is anybody's guess.

IAS 14 made me want to puke, with its obsession about geographic segments... What the f*** is this all about? Presumably, Microsoft's geographic segments are "In a shop", "Via a hardware provider", "In a court" and "Over the internet and whatever". What other geographic segments would be relevant for e-products and business services? Er..

It gets worse. IAS 14 also decides to exclude half the costs of a subsidiary working overseas on the (backward and antediluvian) assumption that cross-charges for international management are somehow irrelevant. In other words, whilst the intra-group charges would cancel on consolidation, the results of the foreign segment would be over-stated by *under-stating* the management/adminstrative resources (from the parent company) required to run that subsidiary. A good view of risk, eh?

How does this stack up against transfer pricing regulations, I wonder?

Are we really heading towards a world where we need complete accounting systems for each of the following purposes:

• management/internal reporting ("the truth")

• financial reporting ("compliance")

• tax reporting & other regulatory reporting ("incrimination")

• listing reporting ("public relations")

• sar box ("what do you mean, 'accounting controls'?")

• environmental reporting ("global warming? Oooh that's not in IAS3.4998/86/KMA/56 v6, so let's pretend that it doesn't exist")

• insurance proposals ("excess caution")

All I can see is Enron happening again and again and again.

Am I missing something here?