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Archive for the ‘Accounting’ Category

Size does not matter that seems clear today in the business economy. In today’s world the most valuable assets and not the machinery, buildings, facilities, inventories or bank deposits. Today outweigh the intangible assets that are rooted in knowledge, skills, values and skills of people who are part of the company.

Just look at the list of Standard & Poor’s of the 500 largest companies in the United States to see that the book value reflects only between 10 and 15 percent of its market capitalization. This gap is accentuated even more strongly among consulting firms, Internet, high technology and telecommunications.

This dilemma has made attempts to measure and standardize information on intangible assets are increasingly a priority for the financial community. The last effort to find a solution to the problem is the method developed by Baruch Lev, who tries to put in sheer numbers of non-material assets. The new approach, called Knowledge-Based Accounting (Knowledge Capital Scoreboard), calculate the future earnings potential of creating knowledge through the standardization of intellectual income.

For example, Lev latest estimates indicate that Microsoft’s knowledge assets worth 211,000 million dollars, the Intel and 170,000 million from Merck & Co. 110,000 million. Contrary to this, big-name companies like Coca-Cola and Dupont, which are characterized by huge plants, buildings and physical inventories-have knowledge assets by just 60,000 and 41,000 million dollars respectively. Read the rest of this entry »

The process of convergence towards global accounting standards, which began nearly a year in the country after the promulgation of Act 1314 of 2009, has gone slowly. However, it is likely that over the coming months, the issue is to accelerate with the upcoming establishment of the Technical Board of Public Accountancy (CTCP), which will carry make recommendations and work plan for the next two years.

Once signed the new law, the awareness by some employers about the imminence of change was greater and there were numerous training processes. However, knowledge of the bulk of business on the International Financial Reporting Standards (IFRS, for its acronym in English) and their implications is still low. “Companies know that is a change in accounting, but do not know how it will affect. Therefore, most should begin not only to train but to measure the impact on their information systems, procedures and policies to boot your conversion plan, “said Felipe Janice, lead partner of Ernst & Young IFRS Colombia.

These are long and complex processes that are not made overnight, it requires changes on many fronts and have big impacts. Rather than implementing a new accounting standards, it is a total change in the company. “The process of conversion to IFRS may take about two years in an organized company, but to do it properly, you have to anticipate three years in its application,” says Janice. Read the rest of this entry »