Investors, stakeholders, and society at large need to understand the value of companies beyond what they can glean from conventional financial reports – and this need is even more pressing during uncertain times such as the present.
IFAC today published its response to Accountancy Europe’s consultation, Interconnected Standard Setting for Corporate Reporting, which addresses the evolution of standard setting to enhance corporate reporting at the global level.
The current corporate reporting system needs to evolve quickly to deal with the challenge posed by a myriad of different jurisdictional requirements and an absence of widely agreed standards in various areas beyond financial reporting. The result is variable quality and lack of comparability, leading to greater cost and inefficient capital allocation for both companies and investors.
As indicated in the IFAC point-of-view on enhancing corporate reporting, a global solution is needed to achieve relevant, reliable, and comparable narrative information and metrics.
“The current reporting ecosystem does not best serve the interests of capital markets, companies or their stakeholders,” said IFAC CEO Kevin Dancey. “The options set out by Accountancy Europe to change the corporate reporting system are useful for furthering the dialogue toward a global and coherent solution. We look forward to continuing this conversation with key stakeholders.”
In its response to the consultation, IFAC endorsed six recommendations to secure an integrated global reporting structure. These include development of a global approach to international standard-setting, a conceptual framework for corporate reporting, and an oversight structure.
A global approach to these three elements— oversight, framework, and standards—is urgently needed in order to enhance corporate reporting. While this is a challenging time for investors, companies and capital markets, the competition for capital will become more challenging, and the demand for relevant and candid information about organizations will be needed to reliably inform decisions about capital allocation and investor and other stakeholder’s assessments of long-term value creation.
Feedback on the consultation is due by April 30. IFAC encourages stakeholders to contribute their views to this valuable consultation.
Darlene Nzorubara is a Principal at IFAC. She manages the compliance and membership activities of IFAC's members and associates in Africa and supports the PAO Capacity Building Program as well as the MOSAIC (Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration) Steering Committee. She also oversees Africa initiatives under IFAC’s MoU with Gavi, the Global Fund, and USAID to strengthen public finance management for greater accountability and transparency through the effective role of PAOs.
Prior to joining IFAC, Darlene worked as a research assistant on governance at Baruch College in New York and worked for two years as a legal assistant for a law firm in Paris, France. Darlene has post graduate degrees in international economic law and in business and exportation law from Université René Descartes – Paris V and a Master in Public Administration from Baruch College.
(a) The objective of this project is to develop provisions for the Code addressing threats that may be created when an individual who was previously involved in an
audit or other assurance engagement (whether as the engagement partner or as another member of the engagement team) is appointed as the EQR on the
same engagement.
