Financial Reporting Supply Chain Project

High quality financial reporting is at the heart of strong capital markets and sustainable economic growth; all those involved in the financial reporting supply chain play a critical role in the quality and reliability of financial information. In 2007, IFAC authorized an independent project to determine where there have been improvements in the financial reporting process in recent years and where there is need for further changes. Further studies are also planned based on the outcomes of this project.

Financial Reporting Supply Chain

The financial reporting supply chain includes people involved in all stages of the preparation, approval, audit, analysis, and use of financial reports. Participants in the financial reporting supply chain include accountants working within organizations, company management, boards of directors, audit committees, outside auditors, standard setters, regulators, investment bankers, lawyers, credit rating agencies, investors, and others.

Scope

The 2007 Financial Feporting Supply Chain Project, chaired by Norman Lyle, focused on exploring the current state of financial reporting globally, whether or not it has improved in recent years, and whether it is now more relevant, reliable and understandable. The project culminated in recommendations designed to further enhance the reliability and credibility of financial reports.

• Online Survey
  
  In June and July 2007, a global online survey was conducted of participants in all segments of the financial reporting supply chain to obtain their views on the current state of financial reporting and areas for improvement. More than 340 individuals responded to the survey. The results of the survey are contained in Appendix A to the Financial Reporting Supply Chain Report.
  
  
• Interviews
  
  During the second half of 2007, extensive telephone interviews were conducted with high-level individuals, including company directors, chief financial officers, regulators, standards setters, financial analysts, investors, and professional accountants.

The results of the survey and the interviews are summarized in the final Financial Reporting Supply Chain Report (see below).

March 2008 Final Report

The final Financial Reporting Supply Chain Report was released in March 2008. It provides an analysis of the survey and interview findings and offers recommendations for the next steps in improving the financial reporting supply chain, including where IFAC and its member bodies can take a lead in projects where accountants and auditors have relevant expertise.

The full report can be downloaded, or it can be viewed by clicking on the sections below.

• Introduction
• Summary of Key Findings
• Survey Methodology
• Corporate Governance
• Financial Reporting Process
• Audit of Financial Reports
• Usefulness of Financial Reports
• Conclusion
• Appendices
  • Appendix A: Online Survey Results
  • Appendix B: People Interviewed for this Survey
  • Appendix C: Other Relevant Publications
  • Appendix D: Credibility Report: Recommendations and Results

IFAC welcomes feedback on all sections of the report.

Next Steps: Business Reporting

IFAC has launched a new project to analyze current actions to address the suitability of business reporting and to identify areas for future development. This project will take the findings of the Financial Reporting Supply Chain Report to the next stage and develop specific recommendations for further action.

Key Contacts

Vincent Tophoff, Technical Manager (vincenttophoff@ifac.org)