Why CFOs Should Care about Integrated Reporting

On November 15, 2011, the AICPA organized a roundtable discussion in California on behalf of the International Integrated Reporting Council (IIRC). Major investors, companies and other stakeholders had the opportunity to discuss the business case for integrated reporting, as well as the challenges in communicating the benefits. Why should CFOs care about integrated reporting? Because it’s about: 1. Communicating vs. Complying; 2. Reporting the Intangibles; 3. Breaking Down Silos; and 4. Increasing Transparency.

To learn more, refer to the article “4 Reasons CFOs Should Care about Integrated Reporting” at AICPA Insights online.

Canadian Standards in Transition - ASPE Resources Available

The Canadian Institute of Chartered Accountants (CICA) has recently issued three new resources to help private companies make a smooth transition to the new accounting standards for private enterprises (ASPE).

A Guide to Understanding Transitional Options and Accounting Policy Choices
This guide helps practitioners understand the choices and decisions available under the new accounting standards for private enterprises (ASPE) and provides practical examples and worksheets.

A Case Study: Financial Statement Comparison
This publication presents an example of non-consolidated and consolidated financial statements prepared in accordance with pre-changeover accounting standards - XFI Version, and financial statements restated in accordance with ASPE.

Transition Considerations for a Non-Complex Entity
This summary highlights significant changes in the new standards as well as items that require management consideration. The information, geared to non-complex entities, raises awareness for typical balances on a set of financial statements.

Research on Corporate Disclosures

Why do some companies provide extensive forward-looking disclosures while others remain relatively silent? What prompts some companies to disclose important discretionary information in their letter to shareholders rather than in the management discussion and analysis (MD&A)? Is the extent of disclosure likely to change as companies move to adopt IFRS? Recent developments in academic research help address these and other questions. Literature on voluntary versus mandatory disclosures and a sample of Canadian public companies illustrate the form and content of forward-looking disclosures in Canadian annual reports. Scan the article “Corporate Disclosures” in the March 2010 edition of CAmagazine online and learn more by reading the CICA research study Corporate Reporting to Stakeholders (June 2008).

CSA - Continuous Disclosure Review Program for March 31, 2010

Canadian Securities Administrators (CSA) have issued Staff Notice 51-332 Continuous Disclosure Review Program Activities for the fiscal year ended March 31, 2010, which summarizes the results of the CSA’s continuous disclosure (CD) review program. The number of reviews (1,351) represents a 23% increase from fiscal 2009 when the CSA conducted 1,094 reviews. The main reason for this increase was the completion of International Financial Reporting Standards (IFRS) transition disclosure reviews. To assist reporting issuers, Staff Notice 51-332 includes detailed examples of the common deficiencies found during the reviews in financial statements, Management’s Discussion and Analysis (MD&A) and oil and gas disclosure.

Making Corporate Reports Readable - Time to cut to the chase

An ability to discern the wood from the trees is a tribute to effective communication. Over the last decade, the corporate reporting wood has become undeniably dense and dark, especially in the banking and financial services sectors. Shareholders have been the so-called beneficiaries of more information than they could have ever believed possible. But more does not mean better. The reality is that more and more corporate information meant that directors and shareholders struggled silently to deliver effective accountability. Stewardship suffered and today we are slowly coming to terms with the painful consequences. (Read Making Corporate Reports Readable - Time to cut to the chase, a 2010 discussion document issued by the Technical Policy Board of The Institute of Chartered Accountants of Scotland.)

Investors: Climate-change policies and disclosures needed

Investor groups representing $13 trillion in assets are calling on governments to adopt strong national climate policies that could trigger the flows of private capital needed to build a low-carbon global economy. The groups also are pushing for mandatory disclosure in public company filings of material climate-related risks and the programs in place to manage those risks. The American Institute of Certified Public Accountants (AICPA) has an initiative to participate in the development of universally accepted accounting and reporting standards for sustainable activities and risks that meet the needs of investors and businesses. (Read the article Investor Groups Call for Climate Change Policies and Disclosures at Journal of Accountancy online.)

Canada - Transition to IFRS and communicating the impact of the changeover

The Canadian Institute of Chartered Accountants (CICA) is providing guidance to help public companies summarize for investors the effects of the changeover to International Financial Reporting Standards (IFRS). Most Canadian public companies will commence reporting in accordance with IFRS in 2011. At that time, the changeover will potentially result in numerous changes to an entity’s financial statements. A new publication by the CICA titled Transition to IFRSs – Communicating the Impact of the Changeover focuses on using Management Discussion and Analysis (MD&A) to explain the effects of the move to international standards. Additional guidance is also available regarding Examples of IFRS transition-related disclosure in Canadian issuer MD&As.

US - SEC guidance on non-GAAP financial measures

The US Securities and Exchange Commission (SEC) staff has issued Compliance and Disclosure Interpretations (C&DIs) on disclosure of non-GAAP financial measures. Among other things, the new guidance clarifies that the SEC does not discourage registrants from disclosing non-GAAP financial measures in filings with the SEC. For example, one of the new Q&A clarifies that there is no prohibition against disclosing a non-GAAP financial measure that is not used by management in managing its business. (Read the SEC Guidance on Non-GAAP Financial Measures issued on January 15, 2010.)

Canada - PwC survey on IFRS Readiness in Canada: 2009

With the January 1, 2011 deadline for Canadian companies' transition to International Financial Reporting Standards (IFRS) looming on the horizon, a new survey by the Canadian Financial Executives Research Foundation (CFERF), the research institute of FEI Canada, and sponsored by PricewaterhouseCoopers (PwC), indicates that many companies will have a race to the finish line. (Read the report IFRS Readiness in Canada: 2009.)

Rising to the Challenge - narrative reporting in the UK

The UK Accounting Standards Board (ASB) has issued Rising to the Challenge, the report of its review of the narrative reporting of 50 UK listed companies in 2008 and 2009. The review focused on:

• how companies are complying with the enhanced business review content requirements from the Companies Act 2006;
• effective communication and presentation of the required content; and
• areas that are leading to clutter in narrative reporting.

Canada - IFRS guidance for lawyers, bankers and investors

Canada's Accounting Standards Board (AcSB) staff has issued Bulletin #9 which emphasizes the need to anticipate how trend analyses, debt covenants and financial ratios that are included in contracts and used to make decisions will change when International Financial Reporting Standards (IFRS) are adopted. This is essential reading for lawyers, bankers and investors.

Corporate reporting - Good practice examples

PricewaterhouseCoopers (PwC) has prepared a catalogue that contains examples of good practice in corporate reporting. Each example is accompanied by an introduction explaining why the example was chosen, as well as a detailed commentary from experts based on the PwC corporate reporting framework. The examples can be searched by industry, company name, country and category or element of the corporate reporting framework. In addition, the examples can be downloaded and printed in PDF format. (Visit the PwC corporate reporting webpage for more information.)

Updated SEC Financial Reporting Manual

The US Securities and Exchange Commission (SEC) Division of Corporation Finance has updated its Financial Reporting Manual. This 323-page manual is an informal reference document for SEC staff and provides general guidance only. The SEC has made it available on its public website. Topics include: Registrant's financial statements; Other financial statements required; Pro forma financial information; Independent accountant's involvement; Smaller reporting companies; Foreign private issuers & foreign businesses; Related party matters; Non-GAAP measures of financial performance, liquidity and net worth; Management's discussion and analysis of financial position and results of operations (MD&A); Reverse acquisitions and reverse recapitalizations; Effects of subsequent events on financial statements required in filings; Tender offers; Employee stock benefit plans; and Multijurisdictional disclosure system. (Read the Updated SEC Financial Reporting Manual or review the contents online.)

FASB initiates project on useful, organized and consistent disclosures

Robert H. Herz, chairman of the United States Financial Accounting Standards Board (FASB) has announced the addition of a new FASB agenda project aimed at establishing an overarching framework to make financial statement disclosures more effective, coordinated and less redundant. The project was added in response to requests and recommendations from constituents including the Investors Technical Advisory Committee and the SEC Advisory Committee on Improvements to Financial Reporting. (Read the FASB Press Release.

IASB proposes guidance on management commentary

The International Accounting Standards Board (IASB) has published for public comment a proposed non-mandatory framework to help entities prepare and present a narrative report, often referred to as management commentary. (Read the IASB Press Release or View the Exposure Draft and Submit a Comment Letter.)

EFRAG - European Survey of Users’ Information Needs

The European Financial Reporting Advisory Group (EFRAG), together with the national French standard-setter, has issued a report summarizing and analyzing the results of a recent survey of users of financial information. (The survey report is available on the EFRAG website.)

SEC releases new version of Financial Reporting Manual

The US Securities and Exchange Commission released a new version of its Financial Reporting Manual. This 267-page manual is intended for the SEC staff but, because it contains useful information for registrants, it has been posted to the SEC's website. The manual provides the SEC staff's interpretations of form requirements and portions of Regulations S-X and S-K, including guidance on topics such as the form and content of a registrant's financial statements, providing separate financial statements of businesses acquired or to be acquired and investments in entities accounted for by the equity method, pro forma financial information, Management's Discussion and Analysis, and non-GAAP financial measures. (Access the Financial Reporting Manual on the SEC website.)

Using Graphics in Corporate Reporting

The Canadian Institute of Chartered Accountants (CICA) has recently published a research report on Using Graphics in Corporate Reporting. The report sets out basic principles and best practices for preparing graphics. It will help management ensure that graphics are accurately and effectively portrayed in a manner that investors and other stakeholders reading corporate reports can easily understand. A complimentary companion booklet entitled Practical Guidance for Preparing Graphics has also been released.

PwC good practice examples

Effective communication with the market in today's tough environment is more important than ever. Therefore, PricewaterhouseCoopers (PwC) has updated its Corporate Reporting site with new examples. The site features over 130 good practice examples relevant to today's reporting. These are drawn from forward-thinking companies worldwide in the 2007 and 2008 reporting season.

Building a Better MD&A – Climate Change Disclosures

The Canadian Institute of Chartered Accountants (CICA) has published a new document in response to a growing demand for guidance relating to Management Discussion and Analysis (MD&A) disclosures. The publication, Building a Better MD&A – Climate Change Disclosures, helps companies provide useful and relevant information to investors.