Usefulness of the Independent Auditor’s Report

According to the CFA Institute, there is a growing worldwide debate on the usefulness of the independent auditor’s report. The current “pass/fail” model simply communicates that the financial statements are, in the auditor’s opinion, presented in accordance with generally accepted accounting principles, but there is no information available on how the auditor addressed the risks of material misstatements identified during the audit process. While it is clear that more information about the quality of the financial statements and the audit process might be useful, it is not clear what kind of information should be communicated through the auditor’s reporting model.

The CFA Institute sought feedback on this topic to assist in informing the audit standards-setting bodies as they consider how to modify the Independent Auditor’s Report to ensure that the user needs are being considered in any proposed changes. Survey results show that 58% think that the independent auditor’s report needs to provide more specific information about how the auditors reach their opinion. The most important additional information to include is: information about the independent auditor’s assessment of management’s critical accounting judgments and estimates (86% felt this was important to include); and, information about the independent auditor’s assessment of the quality, not just the acceptability, of management’s selection and application of accounting principles (90% felt this was important to include).

(For more information, read the March 2011 CFA survey report, Usefulness of the Independent Auditor’s Report, available online.)

Losing the excess baggage - reducing disclosures in financial statements to what's important

The Institute of Chartered Accountants of Scotland (ICAS) and the New Zealand Institute of Chartered Accountants (NZICA) have undertaken a project for the International Accounting Standards Board (IASB). The joint project is to review International Financial Reporting Standards (IFRS) disclosure requirements, to remove much of the detailed information in financial statements so that they can focus on what is important.



Following the Group's detailed review of financial reporting standards, the paper recommends enhancing the use of materiality in financial reporting disclosures and deletion of many disclosure requirements that do not contain material information. It is expected that later this year the discussion paper and its recommendations will be issued by the IASB for exposure and comment. Read the July 2011 paper, Losing the excess baggage - reducing disclosures in financial statements to what's important.

Integrated reporting - Exploring the business benefit

Black Sun is one of Europe’s leading strategic corporate communications consultancies. It brings together corporate reporting, corporate responsibility communications and digital communications for clients to create powerful integrated solutions.  Offering a combination of strategic research and analysis, and ambitious creative thinking, it aims to help large UK and international organizations produce effective communications that build greater trust and confidence with their stakeholders.

Black Sun has carried out extensive research about current integrated reporting on a country-by-country basis, examining a sample of over 100 companies from 8 of the G20 countries, with representation from both developed and emerging markets. A Seminar will be held in London on August 31, 2011 to provide a summary of this international integrated reporting research and to provide an in-depth analysis of those companies that are found to be leading the way.

(View recent research reports, briefing papers and other guidance, such as the publication on Integrated Reporting – Exploring the Business Benefit at the Black Sun website.)

CICA Financial Reporting and Accounting Conference (IFRS and ASPE)

The Canadian Institute of Chartered Accountants (CICA) is presenting its annual Financial Reporting and Accounting Conference on September 26-27, 2011 (optional workshops, September 28) at the Metro Toronto Convention Centre in Toronto, Canada. This conference is Canada’s leading financial reporting and accounting event and provides an up-to-date and extensive review of the most critical current and emerging issues facing both publicly-traded and privately-held corporations in Canada. Extensive coverage of the latest developments in both International Financial Reporting Standards (IFRS) and Accounting Standards for Private Enterprises (ASPE) will be delivered by prominent Canadian, US and international speakers. In-depth workshops addressing the most relevant and challenging financial reporting topics will also be available. (For more information on CICA Continuing Education products, visit the online CA Learning Centre.)

PwC Thought Leadership Highlights

Every month, PricewaterhouseCoopers (PwC) delivers a range of Thought Leadership materials that explore key business issues affecting companies around the world. This month the focus is on a variety of issues that address the following questions and more: What's the key to successful business innovation? What are the implications of the proposed FASB/IASB revenue recognition changes? How are businesses adapting to the changing needs of their talent? What's next for nuclear power? (for example, see View:Striking the innovation balance).

Also, experience the popular 10Minutes series on your iPad, now enhanced with new multimedia. With this inaugural issue, 10Minutes on the CEO Agenda, explore the eight pressing questions facing CEOs today, hear about the challenges directly from business leaders around the world. 10Minutes on the Cloud discusses how cloud computing can go beyond cost savings to offer a way to improve innovation and organizational agility, provide better customer engagement, and harness resources to focus on business imperatives.

Deloitte’s Top 10 Canadian TMT Predictions for 2011

In 2011, Canadian consumers and enterprises will continue to move away from a predictable but narrow world of standardized computing devices and are voting with their wallets in favour of diversity of choice. Between PCs, netbooks, tablets and smartphones, buyers must choose among a wide array of functionalities, platforms, operating systems, sizes, features and price points. Like kids in a candy store, consumers and enterprises will be both excited and overwhelmed by the sheer variety of options available to them. Canadians will use these various devices while shopping, while working, for social networking and for media consumption. (Read more about Deloitte’s Top 10 2011 Canadian TMT Predictions and download the Report.)

ACCA launches online Virtual Research & Insights Conference

More than 6,000 finance professionals have signed-up for the Association of Chartered Certified Accountants (ACCA) online Research & Insights Conference which launched last week. The conference sessions can be viewed on-demand via the ACCA website until October 27, 2011.

HRH Prince of Wales delivered a live address at the conference on his involvement with the Accounting for Sustainability Project, as part of the session on integrated reporting. The online audience also heard from Professor Mervyn King, deputy chair of the International Integrated Reporting Committee (IIRC), who talked about the future scope of integrated reporting, as well as the benefits and challenges of creating a framework that brings together financial, environmental, social and governance information in a clear, concise and comparable format.

The conference covered a wide range of topics from a wealth of expert speakers, including: the new business environment: opportunities for growth; why talent management in finance matters; integrated reporting: a framework for the future; financial issues from Brussels; extended audit reporting; the eProfessional: creating the next generation of accountants; making businesses accountable; cloud computing; social media; and XBRL.

(View the ACCA conference program and ACCA Attendee Guide, then register to access the conference presentations.)

Netwatch - Smartphones are changing everything

Jim Carroll recently noted that: "I was invited to talk to 250 students for my son’s Grade 12 class. When I ran the first text-message poll, I had about 247 responses within 60 seconds. For members of this generation, texting is like oxygen; their mobile smartphone is their view into the world. They’ll look at something like text-message-based banking and think it is a great idea. ...This speaks to a huge trend: significant business model change as a result of the impact of mobile or smartphone technology. ...And the trend isn’t limited to financial services — it’s happening in virtually every industry." To learn more, read the article "Smartphones are changing everything" in the August 2011 issue of CAmagazine online.

IFRS: the first quarter

The first IFRS Canadian corporate report filings are now in. How did the implementation go? What went right? What went wrong? What can we expect in the future? With a number of major IFRS projects underway at the International Accounting Standards Board — policy decisions for leases and financial instruments — the new reporting landscape is still a live environment. For a review of how selected companies were able to prepare their first IFRS reports, read the article "IFRS: the first quarter" in the August 2011 issue of CAmagazine online.

Interim Reporting Under IFRS — An Update

CPR Alert (Issue 14, July 2011) is a non-authoritative bulletin prepared by staff of the Canadian Performance Reporting Board (CPRB) at the Canadian Institute of Chartered Accountants (CICA). This issue, Interim Reporting Under IFRS — An Update, reviews: Filing deadlines – no extension for Q2 and Q3; Items to include in Q2 and Q3 2011 interim financial reports; Auditor review of interim financial reports; MD&A considerations for Q2 and Q3 2011; and Classification of bankers acceptances under IFRS. In addition, the Ontario Securities Commission published IFRS Release No. 3 – IFRS Interim Financial Reports –Tips For Q2 And Q3 on July 7, 2011. That release provides a useful filing tip sheet for Q2 and Q3.