The rules, processes and institutions that govern the global capital markets are struggling to keep up with the constant innovation of the 21st century. Today’s investors demand financial reporting they can trust and businesses are trying to find the right way to express this information while regulators are seeking to promote investor confidence and market integrity.
This is an article written by the worlds 6 largest audit firm CEO’s covering the critical issues coming out of the capital markets in order to improve audit quality and reduce the risk of corporate fraud. The key issues raised at the roundtable discussions were:
1. Global convergence: the need for consistency in financial reporting
• The key finding of the report was an overwhelming support for moving toward a single set of high quality global accounting standards and there is a high level of confidence that this goal can be achieved. • Convergence will ensure that businesses and investors everywhere will benefit from comparability that leads to relevant and reliable financial reports • Current example of work in progress include the FASB and IASB converging US GAAP and IFRS as well as the announcement by the US SEC that it will accept without reconciliation financial statements from foreign private issuers that are prepared in accordance with IFRS and issued by the IASB. • The key themes regarding convergence:
• Preference for principles based standards rather than rules based • The need for sufficient education and training for all participants in the financial reporting supply chain • Recognising the unique needs of small and medium sized enterprises: greater difficulty shifting to IFRS. • Sovereignty: cross border cooperation in order to ensure that national governments do not alter global standards in a way that impacts comparability and consistency