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1. The Brookings project and the "Intangible Research Project": "Understanding Intangible sources of value"
Two main projects are conducted in the USA:
The Intangibles Research Project established at the Vincent C. Ross Institute of Accounting Research at New York University
the Brookings project established by the Brookings Institution in Washington.
These two projects have close links and Baruch Lev plays an eminent role with both projects.
The purpose of the Brookings Project is :
to help initiate a national discussion in the US about better ways of measuring, monitoring and reporting on critical intangible sources of wealth, both inside firms, and in the national accounts;
to assess work already underway to develop better measures of intangibles;
to report what is currently known about the level and the measurement investments in intangibles, how decisions are made about making such investments, and the extent to which investment decisions are influenced by the methods of measurement;
to consider how public policies (e.g. regulations, reporting requirements, and tax rules) affect the development of better measures, and affect decision-making in the private sector where actors try to develop better measures;
to make recommendations on policy changes that could help eliminate or reduce unnecessary or unwarranted adverse distortions.
Two tasks are undertaken:
Results of the project are not yet available and the conference is not yet scheduled. However, an extensive commented bibliography is available on the Project web site, covering the following topics:
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The Intangible Research project established in October 1996 at the Vincent C. Ross Institute of Accounting Research at New York University (the Intangible research Centre) is sponsored and guided by a distinguished board and directed by Professor Baruch Lev. It is "an exploration of the nature, measurement, and disclosure of the complete set of assets, tangible and intangible, which create value for shareholders". The project concentrates on internally generated intangibles, the most critical deficiency of current reporting in meeting users' needs.
The Intangible Research Centre has organised three "Intangible conferences":
The first conference (May 1998) focused on the relationship between intangibles and capital markets.
The second conference (May 1999) looked at the managerial and organisational aspects of intangible investments.
The last conference took place in May 18-19 2000 and it was devoted to intangible investments (intellectual capital), in particular the scientific foundations of knowledge management.
The 4th Intangible conference will take place in May 2001 and will be dedicated to "Investment in Knowledge: Valuation of Knowledge Intensive Enterprise and Asset".
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Contact Brookings
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Intangible research project |
American Institute of Certified Public Accountants
The U.S. AICPA initiative has resulted in the Jenkins Committee Report - "Improving Business Reporting, - A Customer Focus. Meeting the Information Needs of Investors and Creditors - Comprehensive Report of the Special Committee on Financial Reporting". The report is available on AICPA web site.
Financial Accounting Standards Board (FASB)
The mission of the Financial Accounting Standards Board is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information. It has published several statements on Business Combinations and Intangible Assets available on FASB web site.
U.S. Securities and Exchange Commission activities (US SEC)
The US SEC held a symposium on intangible assets in April 1996. The agenda for the symposium covered topics such as the nature and types of intangible assets, including intellectual property, human capital, software and related items. Discussion at the symposium centred upon the types of companies that utilise intangible assets, the importance of these assets from the perspective of investors and other users of financial reporting, and the sources of information relating to intangible assets. Participants also discussed issues related to the measurement of intangible assets by writers of financial reports, concerns about disclosures related to intangible assets, academic research pertaining to such assets, and the experience of U.S. and foreign standards setters with regard to accounting and disclosure of intangible assets. More information on intangible assets issues on the US SEC web site.
"Digital economy 2000" of the US Department of Commerce stresses the importance of intangible assets
In June 2000, Vice President Gore and U.S. Secretary of Commerce William M. Daley released Digital Economy 2000, the Commerce Department's third annual report on the information-technology revolution and its impact on the economy. A chapter entitled "what is new in the new economy?" refers for the first time to intangible assets treatment. Written by Lee Price, chief economist at the Department of Commerce, it is asked: "after software, should other intangible investments enter the national accounts?" (page 67). One can read: "much as businesses expert to earn a return on their investments in software over several years, business spending on intangibles such as training, workplace reorganisation and consultants can also be viewed as investments with long-term pay-offs". Lee Price remarks that the Federal Reserve Board Chairman Alan Greenspan recently urged that the national accounts go beyond software to include other intangible investments. "The treatment of business spending on other intangible investments could have significant effects on a range of measures central to our understanding of the economy."
The report "Digital Economy 2000" is available for downloading at: http://www.esa.doc.gov/de2000.pdf
