“guidelines for Managing and Reporting on Intangibles (intellectual Capital Report)” Guidelines for Managing and Reporting on Intangibles

It is widely accepted nowadays that since the end of the 20 century the Economy has become significantly different from the industrial economy previous to the mid-20 century. Economists consider that the main feature of this new economic environment is the essential role played by intangibles as a fundamental determinant of value creation in business companies. Since management information systems and accounting principles and standards do not allow for a full recognition and disclosure of a wide range of intangibles (acquired or internally produced), many academics and professionals have stated in recent years that management, investment and credit decisions made on the basis of financial statements that do not reflect the intangible determinants of corporate value, may result in significant economic losses both for firms and for their suppliers of goods, services or capital. Since there is presently no common international framework for the identification, measurement and disclosure of information on the intangible determinants of corporate value, but only scattered efforts around the world, it seems appropriate to devote efforts to the development of a set of general guidelines to help companies identify, measure and monitor their intangible sources of value. The objective of these guidelines is to increase management efficiency and to assist companies in the process of producing and disclosing timely, relevant and comparable reports, that allow their providers of capital to draw efficient estimates of the future benefits and risks associated with their investments opportunities. The Guidelines presented in this document attempt to provide a common framework for the identification, measurement and control of intangibles as well as to suggest criteria for the disclosure of information on the intangible determinants of the firm’s value. Therefore, they are addressed both to firms in the initial stages of the design and implementation of an Intellectual Capital Management System (ICMS) as well as to firms with some previous experience, which are concerned about the external disclosure of the information on intellectual capital they already produce and use for internal purposes. The Guidelines attempt to provide assistance initiating firms in the process of developing their ability to identify, measure, manage and value their intangible assets. The next section provides justification for the Guidelines, section three presents a conceptual framework comprising a set of definitions and a classification of intangibles 1 These Guidelines are an outcome of the MERITUM Project funded by the European Union within the framework of the TSER Programme, in which researchers from the following institutions have been involved: Copenhagen Business School (Denmark), the Research Institute of the Finnish Economy and the Swedish School of Economics and Business Administration (Finland), Groupe HEC (France), Norwegian School of Management (Norway), IADE-Autonomous University of Madrid and the University of Seville (Spain Coordinator), and Stockholm University (Sweden).