Six Key Trends that are Shaping the Business World

A 2011 Ernst & Young report Tracking Global Trends looks at six broad, long-term developments that are shaping our world. Key trends include: Emerging markets increase their global power; Cleantech becomes a competitive advantage; Global banking seeks recovery through transformation; Governments enhance ties with the private sector; Rapid technology innovation creates a smart, mobile world; and Demographic shifts transform the global workforce.

The three underlying drivers that have helped establish and perpetuate these trends are:

1. Demographic shifts. Population growth, increased urbanization, a widening divide between countries with youthful and quickly aging populations and a rapidly growing middle class are reshaping the business world and society as a whole.
2. Reshaped global power structure. As the world recovers from the recession, the rise of relationships between the public and private sectors has shifted the balance of global power faster than most could have imagined just a few years ago.
3. Disruptive innovation. Innovations in technology continue to have massive effects on business and society. Emerging markets are now becoming hotbeds of innovation, especially in efforts to reach the growing middle class and low-income consumers around the globe.

Canadian Public Accountability Board (CPAB) Report 2011

Since its incorporation in 2003, the Canadian Public Accountability Board (CPAB) has issued seven annual public reports. The first five reports summarized inspection findings. Two years ago, CPAB changed its approach to focus on the root causes of audit deficiencies and to highlight the key recommendations that, if implemented, would have the greatest impact on improving audit quality. In the past year, CPAB has enhanced its risk assessment capabilities and now uses a more robust risk analysis process to identify high risk firms and audit engagements, improving the effectiveness of its inspections. CPAB has also increased the frequency of its inspections of firms that audit fewer than 100 reporting issuers.

According to CPAB, audit quality in Canada continues to be sound. Nonetheless, the 2010 inspections showed no significant improvement in audit quality from the previous year. The report identifies the major areas that would enhance audit quality. These include engagement supervision and review, application of professional skepticism, improving substantive analytical procedures, providing sufficient audit evidence, improving communication with audit committees, preparing significant issues and completion memos, and enhancing consultation on 25 complex, non-routine transactions.

(Read the CPAB Report on the 2010 Inspections of the Quality of Audits Conducted by Public Accounting Firms, issued in April 2011.

Transocean: No Apologies Over Gulf Oil Spill

"Fourteen months after the Deepwater Horizon drilling rig exploded 50 miles southeast of Venice, La., killing 11 men and setting off the largest offshore oil spill in U.S. history, Transocean (RIG), the company that owned and ran the ill-fated 32,600-ton vessel, finally issued its official account of what happened and why. It produced a report on June 22 of no fewer than 854 pages, divided into two volumes, and spared no detail. The bottom line, though, isn’t complicated:It was BP’s (BP) fault." (Read the full story "Transocean: No Apologies Over Gulf Oil Spill" at Bloomberg Businessweek online.)

About the Global Accounting Alliance

The Global Accounting Alliance (GAA) comprises 11 of the world's leading professional accountancy institutes. It represents more than 775,000 professional accountants in over 165 countries from around the globe. The GAA promotes quality services, shares information and collaborates on important international issues. As part of this effort, the GAA publishes a bi-monthly online journal. GAA Accounting includes authoritative yet accessible articles to advance the understanding of theory and practice in accounting, business finance and related subjects for members around the world. The June 2011 edition is available online and also as a Digital Edition.

About the National Investor Relations Institute (NIRI)

Founded in 1969, the National Investor Relations Institute (NIRI) is the professional association of corporate officers and investor relations consultants responsible for communication among corporate management, shareholders, securities analysts and other financial community constituents. The largest professional investor relations association in the world, NIRI’s more than 3,500 members represent 2,000 publicly held companies and $5.4 trillion in stock market capitalization. Investor relations is a strategic management responsibility that integrates finance, communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial community, and other constituencies, which ultimately contributes to a company's securities achieving fair valuation. (See IR Weekly and the President's Blog for the latest news and developments in investor relations.)