Search for

Twenty years on: the legacy of MCRV

18 Apr 08

Making Corporate Reports Valuable was a seminal publication, but even after two decades, some of its ideas are still seen as too radical

I was privileged to know Aileen Beattie for a few of the twenty or so years in which she was technical director with ICAS. She had a sharp and creative mind, but was also patient, and had a knack of explaining arcane accounting concepts to minds that were less sharp.
Aileen is commemorated in an annual series of lectures – the latest was given earlier this month -  and this week also saw the twentieth anniversary of Making Corporate Reports Valuable, one of the most significant projects with which she was involved.
At an ICAS event held in London, with an invited audience of leading figures in accounting and finance, a distinguished panel debated the legacy of what came to be known as MCRV. The report, published by ICAS in 1988, was a classic piece of “blue-sky” thinking. It came in two parts, a “patch-up” to fix what were seen as some of the immediate problems in reporting, and an “entirely new package” based on what would be possible if starting out with a blank sheet of paper.
The two main principles were, first, that accounts should reflect economic reality, not historical costs; and second, that as far as possible, users of accounts should be seeing the same kind of information on the company and its performance as the management.
Some of the proposals in MCRV, such as a cashflow statement, and including more non-financial information on the company’s environment and objectives, have become accepted elements in company reporting. Others are still seen as too radical.
The most controversial aspect of MCRV was its focus on “net realisable value”, that is basing the company’s balance sheet on what assets are worth, rather than on what was paid for them. Even now, while “fair value” has become part of modern accountancy, the system we have is still a mix of  current values and historic costs.
In reality, you do not get a blank sheet of paper to start afresh when it comes to financial reporting. The FDs and their accountants preparing company reports have enough trouble coping with the many incremental changes of the past few years.
Even so, it’s important to step back from the detail of existing rules to consider what financial reporting is really trying to achieve. Many of the reforms over the past twenty years owe a lot to radical projects such as MCRV, so it’s fair to say that ICAS has punched above its weight when it comes to shaping the future of accounting.

Have your say

Your comments:


Thursday April 24, 2008, 03:13

Please consider making available an online copy of this landmark publication!

Derek Scott

Wednesday June 4, 2008, 08:54

Sorry to sound a negative endnote on what was and still is a thought-provoking piece of quality research, but the idea that "net realisable values" are what assets are worth is flawed thinking. Investment is based on capital employed in assets which is expected to earn income and in many cases to grow in capital value over time. Marking such assets to market (as a proxy for NRV) is mistaken.


MCRV | Making Corporate Reports Valuable | ICAS | Aileen Beattie
ICAS SkyScraper (link opens in new window)Advertisement