IFRS accounts continue to astound me. The prospect of anyone securing a true and fair view of the operations of a company by using them appears to me remote in the extreme.
Let's ignore the absurdity of fair value right now. Let's concentrate instead of the possibility is provides of accounting for 'operations classified as held for sale' in IFRS 5.
The Cadbury Schweppes accounts for 2006 provide a good example. Look at this:
What's just about the most important line there? Discontinued operations, which tucked away in note 32 has its own turnover, costs, employment note, tax note, even auditor's remuneration note let alone a whole balance sheet all conveniently out of site. And yet it's the biggest profit source for the year.
So now when someone has something to hide in a PLC they simply say 'we're going to sell that' and the whole thing gets swept under the carpet and out of the site of any form of real consolidation because none of these things appear under the heading you'd expect to find them in, but under this separate category hidden away at the back of the notes.
As a result turnover in these accounts is not the turnover. Nor are any costs as stated. Nor is the tax bill as declared. Come to that neither are the debtors, inventories, goodwill or just about anything else in 2005, in particular. Don't take my word for it. Note 32 says:
The total assets and total liabilities of the discontinued operations are each shown separately and excluded from the individual line items of the balance sheet in 2005.
And you call that true and fair? I don't. These accounts are clearly not true and fair. They merely comply with IFRS. That is not the same thing. I call IFRS misrepresentation at management whim.
But I forget: that's the whole purpose of IFRS accounting and the raisin d'etre of the International Accounting Standards Board.