guidelines for managing and reporting on intangibles (intellectual
guidelines for managing and reporting on intangibles (intellectual
guidelines for managing and reporting on intangibles (intellectual
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management <str<strong>on</strong>g>and</str<strong>on</strong>g> in<str<strong>on</strong>g>for</str<strong>on</strong>g>mati<strong>on</strong>-disclosure practices <str<strong>on</strong>g>for</str<strong>on</strong>g> <strong>intangibles</strong> with those that have<br />
been proposed after an exhaustive analysis of a broad sample of European firms <str<strong>on</strong>g>and</str<strong>on</strong>g> a<br />
survey of the opini<strong>on</strong>s of a set of experts in Ec<strong>on</strong>omics, Business Administrati<strong>on</strong>,<br />
Finance, Accounting <str<strong>on</strong>g>and</str<strong>on</strong>g> Auditing. Rather than in showing them how to start <str<strong>on</strong>g>managing</str<strong>on</strong>g><br />
their <strong>intellectual</strong> capital, the value added of these Guidelines <str<strong>on</strong>g>for</str<strong>on</strong>g> those firms relies<br />
mostly in their ability to show them how to do it in a harm<strong>on</strong>ized way that will result in<br />
comparable results.<br />
In c<strong>on</strong>trast, firms that still have not developed <str<strong>on</strong>g>and</str<strong>on</strong>g> implemented an in<str<strong>on</strong>g>for</str<strong>on</strong>g>mati<strong>on</strong> system<br />
to manage their <strong>intangibles</strong>, but wish to do so <str<strong>on</strong>g>and</str<strong>on</strong>g> realize that their disclosure might<br />
c<strong>on</strong>siderably affect their financial <str<strong>on</strong>g>and</str<strong>on</strong>g> market per<str<strong>on</strong>g>for</str<strong>on</strong>g>mance, could find in the next<br />
secti<strong>on</strong> a useful guide <str<strong>on</strong>g>for</str<strong>on</strong>g> the Management of Intellectual Capital, since it results from<br />
the analysis of practices from experienced firms. Their “best practices” have been<br />
compiled <str<strong>on</strong>g>and</str<strong>on</strong>g> analytically organized to produce a model that can be applied by the<br />
newcomers becoming increasingly aware of the importance of <strong>intangibles</strong>, <str<strong>on</strong>g>and</str<strong>on</strong>g> realizing<br />
that their disclosure might c<strong>on</strong>siderably affect their market per<str<strong>on</strong>g>for</str<strong>on</strong>g>mance.<br />
Secti<strong>on</strong> 5 deals with the presentati<strong>on</strong> of the Intellectual Capital Reports. It is the result<br />
of the analytical process described in Secti<strong>on</strong> 4 <str<strong>on</strong>g>and</str<strong>on</strong>g> indicates the main elements an<br />
Intellectual Capital Report should c<strong>on</strong>tain. It reflects both what companies actually<br />
disclose about what they do <str<strong>on</strong>g>and</str<strong>on</strong>g> what markets <str<strong>on</strong>g>and</str<strong>on</strong>g> stakeholders may want to know.<br />
There<str<strong>on</strong>g>for</str<strong>on</strong>g>e, companies that have developed their own management process can disregard<br />
Secti<strong>on</strong> 4 <str<strong>on</strong>g>and</str<strong>on</strong>g> go directly to Secti<strong>on</strong> 5.<br />
However, it must be kept in mind that the process of <str<strong>on</strong>g>managing</str<strong>on</strong>g> <str<strong>on</strong>g>and</str<strong>on</strong>g> <str<strong>on</strong>g>reporting</str<strong>on</strong>g> <strong>on</strong><br />
Intellectual Capital is highly idiosyncratic <str<strong>on</strong>g>and</str<strong>on</strong>g> unique to each <str<strong>on</strong>g>and</str<strong>on</strong>g> every firm. There is<br />
no universally valid recipe; each company should develop its own process. At the same<br />
time, the rati<strong>on</strong>ale underlying the use of these Guidelines is to ensure that the results of<br />
such processes will be comparable with those of other companies, as is presently the<br />
case with financial statements. This is a difficult trade-off <str<strong>on</strong>g>and</str<strong>on</strong>g> very likely to suffer from<br />
teething troubles in these first attempts. We want to move from the current situati<strong>on</strong>,<br />
where in<str<strong>on</strong>g>for</str<strong>on</strong>g>mati<strong>on</strong> <strong>on</strong> <strong>intangibles</strong> is scarce <str<strong>on</strong>g>and</str<strong>on</strong>g> based up<strong>on</strong> incomplete <str<strong>on</strong>g>and</str<strong>on</strong>g><br />
heterogeneous c<strong>on</strong>ceptualizati<strong>on</strong>s, to a new scenario in which we will have<br />
homogeneous, reliable, verifiable <str<strong>on</strong>g>and</str<strong>on</strong>g> comparable in<str<strong>on</strong>g>for</str<strong>on</strong>g>mati<strong>on</strong> <strong>on</strong> the intangible<br />
determinants of the value of companies.<br />
The process will surely take time thus making these Guidelines instrumental by i)<br />
encouraging companies to produce in<str<strong>on</strong>g>for</str<strong>on</strong>g>mati<strong>on</strong> <strong>on</strong> their <strong>intellectual</strong> capital, ii) providing<br />
a comm<strong>on</strong> c<strong>on</strong>ceptual framework, <str<strong>on</strong>g>and</str<strong>on</strong>g> iii) showing best practices in <str<strong>on</strong>g>managing</str<strong>on</strong>g><br />
<strong>intangibles</strong> by European companies, <str<strong>on</strong>g>and</str<strong>on</strong>g> iv) suggesting a comm<strong>on</strong> procedure to report<br />
<strong>on</strong> those <strong>intangibles</strong>.<br />
4. Management of Intellectual Capital<br />
This secti<strong>on</strong> describes the usual steps taken by a firm aware of the importance of its<br />
<strong>intangibles</strong> <str<strong>on</strong>g>for</str<strong>on</strong>g> success that is willing to adapt its management c<strong>on</strong>trol system to<br />
explicitly taking into c<strong>on</strong>siderati<strong>on</strong> <strong>intangibles</strong>. The following statements are based <strong>on</strong><br />
the analysis of firms that c<strong>on</strong>sider the management of <strong>intangibles</strong> as a strategic issue<br />
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