Improvement to the Financial Reporting Supply Chain and Areas for Future Action examined in new report
"Financial Reporting Supply Chain: Current Perspectives and Directions", a new report highlights improvements in corporate governance, the process of preparing financial reports and the audit of financial reports following significant efforts to strengthen financial reporting in recent years. Yet despite these improvements to the financial reporting process, the report; commissioned by the International Federation of Accountants (IFAC); points out that the understandability of financial reports has not improved.
The report's findings are based on an independent global survey of more than 340 participants from all sectors of the financial reporting supply chain worldwide. The survey sought to determine the extent to which the financial reporting process, and financial reports have improved and where there is need for further action to make them more relevant.
Among the key findings, the survey found that corporate governance has improved, convergence to international standards, enhanced regulations governing financial reporting and improved internal control over financial reporting systems all contributed to enhancing the reliability and relevance of the reports. Improvements to audit standards and practices and strengthened independence rules were seen as having contributed to enhanced audit quality.
To address the usefulness of financial reporting, survey participants recommended:
- Improving communications among participants in the financial reporting supply chain.
- Producing financial and business information that is relevant, reliable and understandable.
- Including more business-driven information in financial reports.
- Promoting the use of technology to enable users to compile their own information.
The full report can be downloaded from the IFAC website at http://www.ifac.org/frsc