The traditional financial reporting team, focused solely on preparing GAAP-compliant financial statements, is increasingly becoming a broader corporate reporting team which gathers data across an organization to report on both traditional financial metrics and the organization's operations as a whole. The corporate reporting team is responsible for translating operational data into meaningful management and investor information through reports and presentations. These reports are powerful communication tools, not just compliance exercises.
With years of reporting experience, WorkOps understands the delicate balance between keeping up with financial reporting requirements while simultaneously preparing management and investor-friendly presentations. Given the complexity and volume of work required for accurate reporting, sometimes you can't see the forest for the trees. To close off the year and get ready for 2018, we've put together some key corporate reporting trends to keep in mind.
Every year brings more and more disclosures. In addition to new IFRS and U.S. GAAP standards such as leasing and revenue, corporate reporting teams need to be ready for the impact of new auditor reporting standards. Both the Canadian Auditing and Assurance Standards Board and the Public Company Accounting Oversight Board have implemented changes to auditor reports which will result in additional work performed by auditors. Notably, the enhanced auditor reports will require discussion and disclosure of key audit matters. Expect more audit questions, requests for additional supporting documentation, and discussions around disclosures.
Convergence and Comparability
Where each country previously had its own set of accounting standards, we have now seen much of the world move to IFRS and seen increasing convergence between IFRS and U.S. GAAP. Investors want comparability between companies and greater transparency. Use of XBRL is also on the rise; XBRL is already widely used around the world and adoption continues to grow. The U.S. has expanded mandatory XBRL usage to SEC Foreign Private Issuers reporting under IFRS; these trends towards increased comparability and convergence are likely to continue as both businesses and investors look beyond local borders for new opportunities.
Environmental, Social and Governance ("ESG") Reporting
Investors are increasingly seeking information on sustainability metrics and social responsibility activities. Notably, an increasing number of large U.S. asset managers are voting for increased ESG reporting. A recent Unilever report shows that retail customers are more likely to purchase from brands which have a positive social and environmental impact. Depending on the nature of your reporting, this information may be in a standalone report or it may be incorporated as part of your annual reporting. In order to integrate this information into annual financial reporting, you need to ensure that ESG data is being accurately sourced, validated, and presented. Expect to see increased demand for more extensive ESG reporting.
December is a great time to step back, assess the year that was, and prepare for the year ahead. Keeping long-term trends in mind can help ensure that your corporate reporting team will be prepared for the challenges which lie ahead; whether through training courses, implementing new processes, leveraging software, or a combination of all three, it's better to be ahead of the curve than behind.