Accounting Rule Makers Are Cutting a Test of Whether Deals Worked

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Every purchase carries two numbers. The price is on the invoice, and what the purchase produced for you usually isn’t written down anywhere, because no rule I know of asks anyone to write it down.

For one kind of purchase, somebody tried. In March 2024 the International Accounting Standards Board published a draft amendment to IFRS 3 that would make a company acquiring a business disclose the objectives and targets it set on the acquisition date, and then report, each year afterward, how far those objectives and targets were being met.

The draft is still a draft. The Board last discussed it on September 23, 2026, and, in the published record of that meeting, “was not asked to make any decisions.” What happened in between is worth following, because the element under the most pressure is the one that answers the question.

What The Draft Asked For

The proposed wording reads like a buyer’s own test, which is unusual for an accounting document. A company would disclose, in the year of the acquisition, “the acquisition-date key objectives and the related targets.” Then, in that year and in each reporting period after it, “the extent to which the acquisition-date key objectives and the related targets are being met.” That second disclosure had two parts. One was the actual performance management was reviewing. The other was “a statement of whether actual performance is meeting or has met the acquisition-date key objectives and related targets.”

The draft also said what makes a target usable. “A target shall be specific enough for it to be possible to verify whether the related key objective is being met.” In the proposed wording itself, the word verify appears once, and that is where.

It went further. If management had not started reviewing whether the objectives were being met, and did not plan to, the company would have to disclose that fact and the reasons. The draft allowed for an acquirer that never looks, and made it say so in writing.

The Objections Came From The Side Doing The Buying

The feedback split along a familiar line. The Board’s own summary records that “almost all users agreed with the proposal to require an entity to disclose performance information”, and that “most preparers continued to disagree with requiring this information in financial statements.” In the Board’s vocabulary, users are the investors reading the statements and preparers are the companies doing the acquiring.

Four reasons were given: the information is partly forward looking and not the kind usually reported in financial statements; it would be difficult and costly to verify; it is commercially sensitive and raises litigation risk; and it would cost money to produce, because systems would have to be built. The staff wrote that last one down plainly: “we understand some entities might not have robust systems and controls in place to prepare and disclose performance and expected synergy information.” That objection is about capacity rather than about whether the question is a fair one to ask.

The European Securities and Markets Authority took the investors’ side and said why. Its July 2024 letter says the disclosures currently required on the reasons for an acquisition and its synergies “are often missing or boilerplate”, and it answered the commercial sensitivity argument in one line: “ESMA considers that commercial sensitivity is generally not a valid reason for not informing investors.”

What The Revised Package Keeps, And What It Drops

By May 2026 the staff had a revised package in front of the Board. It narrows the targets in scope to ones denominated in currency units, which takes measures like market share out, and it adds a requirement to disclose how performance is measured. It also takes one thing out: “removing the proposed requirement to disclose a qualitative statement of whether actual performance is meeting or has met the KOTs”.

So the version on the table would publish the target and the actual number against it, and leave the reader to decide whether one met the other.

On May 20, 2026, the Board tentatively decided that the benefits of that revised package would justify its costs. Seven of thirteen members agreed. Of the votes recorded anywhere in that month’s Update, this was the narrowest margin. In July the Board sent the piece on subsequent performance back to the staff, to “explore further the type of subsequent performance information that an entity would be required to disclose”.

What This Reaches, And What It Does Not

None of it touches most of what a company buys. It applies to acquisitions of businesses, and within those only to a subset the draft calls strategic. Software, services, capability, multi-year platform commitments: I know of no accounting standard that asks whether any of them produced what it was bought for, and none is being drafted to. The federal government’s rewritten quality rules stop at the same point, which is the subject of Rewritten US Federal Quality Rules Never Check the Result.

That leaves the buyer holding it, and the work happens before the signature rather than after it. A request can say what the purchase has to produce, how that gets measured and by whom, which conditions have to hold for it to work, what evidence the supplier will supply and when, and how competing bids will be compared on all of it. Put those five things in the request and the record exists on the day the contract starts, instead of two years later when somebody finally asks for it. That is a Request for Value.

We built those cases on the vendor’s side, and what they never contained was a way for the buyer to check them afterward. A vendor that actually delivered has as much use for that record as the buyer does, because it is the only thing that tells a real result apart from a competitor’s promise.

The Board is deciding what a company must publish. Nothing it decides reaches what a buyer writes down before it signs.

Sources: IASB exposure draft on business combinations disclosures, goodwill and impairment, March 2024; IASB staff paper 18A, May 2026; IASB Update for May 2026, with the July 2026 and September 2026 Updates on the project page; ESMA comment letter ESMA32-644431002-523, July 2024.

Keep reading: ACT II · Chapter 11: Outcome Credibility Markets