High quality financial reports lie at the heart of strong capital markets and sustainable economic growth. All those involved in the financial reporting supply chain play a critical role in the quality and reliability of economic information. To facilitate understanding of these roles and the areas requiring changes, IFAC has undertaken several studies.

Financial Reporting Supply Chain - March 2008 Report

To ascertain the state of financial reporting globally, in 2007 IFAC commissioned an independent study on the financial reporting supply chain, chaired by Norman Lyle. The study focused on whether or not financial reporting has improved in recent years and whether or not it is now more relevant, reliable and understandable. In March 2008, the results of the study were released in a report entitled Financial Reporting Supply Chain: Current Perspectives and Directions.

The Supply Chain

As part of the study, more than 340 participants took part in an online survey and interviews were conducted to obtain input from those in every segment of the financial reporting supply chain: professional accountants, company executives and senior-level management, boards of directors, audit committees, external auditors, standard setters, regulators, financial analysts, investment bankers, lawyers, credit rating agencies, investors, and others.

Report Overview

The report explored the areas of corporate governance, the financial reporting process, the audit of financial reports and their usefulness by examining the people and processes involved in the preparation, approval, audit, analysis and use of financial reports. It uncovered areas where significant improvements in the financial reporting process have been made and areas where there is a need for continued work.

Business-Reporting Project (initiated July 2008 and ongoing)

Following the March 2008 publication of the report, Financial Reporting Supply Chain: Current Perspectives and Directions, and in response to recommendations made within it, the IFAC Board established a Business Reporting Project Group, chaired by Charles Tilley, to study progress in the areas of governance, financial reporting, and auditing around the globe.

The first step of this follow-up project was a global research study, in which 74 IFAC member bodies from 59 different countries and jurisdictions, including all major economies, participated.

The results of the study indicate that in many countries and jurisdictions progress has been made in numerous areas of governance, financial reporting, and auditing, such as new or revised codes and increased convergence of standards. However, the study also highlights a number of persistent and important issues that still need satisfactory solutions.

The report, Developments in the Financial Reporting Supply Chain—Results from a Global Study among IFAC Member Bodies, contains the results from the study.

Next Steps in IFAC’s Business Reporting Project

The next step in IFAC’s Business Reporting Project will be a series of interviews with investors, preparers, auditors, standard setters, and regulators from around the globe to provide practical solutions for making business reporting more useful and for further improving the communication (on business performance) between a business and its stakeholders.

The findings of the Business Reporting Project are planned to feed into the development of International Good Practice Guidance (IGPG) to assist professional accountants in business and their organizations in preparing relevant, high-quality business reports.

IFAC welcomes your ideas and suggestions for these next steps. Please send these to Vincent Tophoff, Senior Technical Manager.

Key Contacts

Vincent Tophoff, Senior Technical Manager (vincenttophoff@ifac.org)