Accounting for intangibles in the digital economy: Are current standards sufficient?

Abstract

The digital economy has shifted corporate value from tangible assets to intangibles like software, data, and algorithms. However, current accounting standards—specifically IAS 38 and IFRS 3—remain rooted in the industrial age. This qualitative study examines how effectively these frameworks address the recognition, measurement, and reporting of digital assets. Using purposive and snowball sampling, interviews were conducted with 15 financial professionals, including accountants, auditors, and managers. Thematic analysis revealed critical recognition gaps, valuation hurdles, and reporting discrepancies concerning customer data, algorithms, and internally generated intellectual property. Respondents noted that existing standards fail to capture the full economic value of digital assets. This limitation distorts corporate valuations and creates information asymmetry, which ultimately misinforms investors. Consequently, current frameworks offer an inadequate foundation for evaluating digital-driven companies. To address these transparency and comparability challenges, regulatory bodies must provide more detailed standards. The study recommends developing modern reporting guidelines, implementing hybrid valuation methods, and enhancing qualitative disclosures. Ultimately, this research contributes an integrative critique of IAS 38 and IFRS 3, advancing the debate on financial reporting sufficiency in the digital era.