M&A accounting 'needs to be improved'

07/01/2010 M&A accounting 'needs to be improved'

More needs to be done to improve accounting in mergers and acquisitions (M&As), the Financial Reporting Council (FRC) has argued.

The body said may companies have been in touch to complain that the current process is expensive and difficult, with investors finding the information produced not relevant.

Its study into the accounting measures used in M&As found that some firms are unfamiliar with the requirements of the International Financial Reporting Standard, resulting in the creation of poor quality data.

Director of corporate governance at the FRC said that changes must be made in order to improve the situation, a move that may benefit those in audit jobs.

"A step change is needed in the quality of the information about M&A transactions given in annual reports and accounts," he remarked.

Last month, audit jobs provider Ernst & Young said the market for M&As in the UK is showing signs of "loosening up", which should increase the number of deals taking place.

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