2006 – Reporting Intellectual Capital (RICARDIS report) – Project for the EU chaired by Tim Hoad and published by DG Research (European Commission).
The primary aim of this report is to encourage business to suppliment their financial reports with additional information relating to Intellectual Capital (IC) which is missed from financial statements. Intellectual Property (IP) and information relating to Research and Development activities (R&D) was seen as particularly important.
There are several purposes for this additional reporting:
To provide an improved understanding of value creation within the business and the relationship between various forms of intellectual capital and future cash flows.
To ensure that management identifies all forms of intellectual capital, understands its value, and manages whatever is important for the future success of the business.
To ensure that management makes better decisions on the way in which capital is allocated within the business because they understand what is important and valuable, and, alongside this, better identification of overall risks and the actions available to mitigate them.
To ensure efficient “access to finance” – be this equity or debt – by providing an insight to lenders and investors of the intangible factors which provide organisations with various forms of competitive advantage.