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April 28, 2009

Pearson chief supports rules-based accounting

Principles-based accounting standards only work if everyone has the same principles, according to Robin Freestone, chief financial officer of global media company Pearson.

A focus on comparability and compliance would make financial reporting more useful, Freestone told a Global Accounting Alliance roundtable in London this month.

“Users get very frustrated when we are accounting differently from competitors and rightly so,” Freestone said.

“Comparability is eroded with a move towards principles-based standards and that worries me.”

Freestone said he was also not convinced financial reporting could be made simpler. He said it was a sensible objective, but could be very difficult as business gets continually more complex and investors demand more detailed information.

The majority of roundtable participants, when asked to vote on whether financial reporting could be made simpler and more useful, agreed that this was probably not possible.

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