The quality of financial reporting in companies is a key focus for ACCA and the Accounting and Corporate Regulatory Authority (ACRA). Their joint research focuses on how to improve the quality of financial reporting in companies, following feedback that poor quality financial reporting can be a major hindrance to high quality and value-adding audit.
To examine the challenge of upholding the quality of financial reporting in companies a survey of preparers of financial statements in companies in Singapore was conducted by ACCA and ACRA for the first time. Key findings suggest that companies need to firmly take ownership of financial reporting and to put greater emphasis on developing the resources needed for effective financial reporting.
The survey of preparers gauged preparers’ mindsets towards financial reporting, its challenges, and their preferred solutions to these challenges. Close to 400 accountants from large listed to small companies participated in the survey in May and June this year. Complementing the survey on financial preparers, a focus group of directors, preparers and auditors was held in June.
Key findings of the survey and focus group include:
- Companies and preparers need to firmly take ownership over their financial statements. About 50% of the survey respondents appeared to believe that the primary responsibility over financial preparation fell on auditors rather than them. Adding to this were views from the focus group that some company officers are not fully engaged in financial reporting because they see it as a compliance exercise, and that many rely on their auditors to drive the process.
- Frequent changes and the increased complexity of Financial Reporting Standards (FRS) were posing a major challenge to some financial preparers.
- Survey respondents and focus group participants identified the following as top measures to raise the quality of financial reporting and making it more relevant: employing and retaining qualified accountants in the finance function; continuous training for the finance team as well as for the board directors and management; funding for new technological support and professional assistance; and support from top management who recognise that external financial reporting is value-adding and not merely a compliance exercise.