Few businesses are absent from this shift, with some harnessing vast troves of, for example, customer behaviour data for commercial gain — yet this value often does not appear on balance sheets.
Internally generated data resources (data) have become critical drivers of corporate performance, but traditional accounting frameworks, rooted in physical and clearly definable assets, struggle to recognise their worth. This disconnect raises fundamental questions about the relevance and completeness of current financial reporting in a digital age.
This report examines the tension between measurement reliability and value relevance, proposing two divergent pathways: enhanced disclosure or enhanced recognition. As debates intensify around the role of accounting in reflecting digital value creation, the paper critically evaluates the limitations of existing standards — particularly IAS 38 — and outlines potential reforms to ensure financial reporting evolves in step with the intangible, data-driven future of business.
It is imperative to note that the views expressed herein do not necessarily reflect the official stance of ICAEW.
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