Abstract
This paper is about Financial Reporting for employees and their representatives. They have specific needs that do not meet those of shareholders. The need for employees to be given comprehensive information on the company’s situation is not taken into account by the prevalent reporting standards, i.e. IFRS.
In the first part of this paper, we show how IFRS are detrimental to the specific reporting’s needs of employees and works councils. In the second part, we present Jacques Richard's contribution to company’s financial analysis, to the benefit of all stakeholders.
Now that the IFRS have invaded the field of accounting and financial reporting, we should fall back on ad hoc forms of reporting, to meet the needs of employees and their representatives. We explore some of these ad hoc forms, only to conclude that they have limited scope and few support from the regulatory bodies.
This conclusion is not satisfactory per se. It comes down to the fact that the IFRS have prevailed, even though they clearly do not meet the needs of users. Moreover, there is no certainty that shareholders will take advantage from the instability created by these standards. The fact that since the last financial crisis, the value of many listed companies is now lower than that of their book value, even when inflated by “made in IFRS” pyrotechnics and updates, indicates a level of pretension that cannot withstand economic cycles.
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Notes
- 1.
CEGOS’s Survey realized in 2004 with 800 French employees, representative of a national sample, which covers three big categories of active persons: executives, intermediate occupations and workers.
- 2.
For Charreaux and Desbrières, value added is the difference, on the whole value chain, between the opportunity price for the customer and the opportunity cost for the supplier. This value added is then distributed among the various stakeholders of the company.
- 3.
Particularly in connection with the Sarbanes-Oxley Act in the United States and its French equivalent, the Financial Security Act (loi de sécurisation financière) in 2003.
- 4.
In this connection, we look back with some nostalgia at our comments in the 1980s when we referred to the “game of allocations to and reversals of provisions” when analysing net income; and the British colleague who told us that in France we always knew exactly how much should be allocated to provisions but never why it was necessary to create provisions.
- 5.
New economic regulations.
- 6.
For unlisted companies with fewer than 500 employees or a turnover of less than EUR 100 million, this obligation will not come into effect until financial year ending 31 December 2016.
- 7.
Read also: Report on 9 years of enforcement of the NRE Law (New Economic Regulations) on company reporting. Alpha Group’s Centre Etudes & Prospective, April 2012.
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Ferracci, P. (2016). IFRS and the Works Council in France. In: Bensadon, D., Praquin, N. (eds) IFRS in a Global World. Springer, Cham. https://doi.org/10.1007/978-3-319-28225-1_8
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DOI: https://doi.org/10.1007/978-3-319-28225-1_8
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