ICAEW examines financial reporting and users' needs

USERS OF FINANCIAL reports are the focus of a new study by the ICAEW. Different groups, their needs, and the way in which these overlap and diverge will be examined, with a view to informing the debate on who financial reporting is for.

Corporate reporting manager Brian Singleton-Green (pictured) said the study was sparked by debate over whether investors or regulators should be prioritised. Entitled Financial Reporting: Different Users, Different Needs, work will begin in the second half of this year, with publication anticipated for December 2012.

The credit crisis threw up questions over financial reporting, with some experts challenging the traditional assumption that accounts should be aimed at investors and shareholders. This found favour with regulators, who argued the primary purpose reporting should be to boost financial stability.

Singleton-Green said the study is not intended to decide who is right or wrong, but rather, to collect information on what users want from financial reporting, and examine alternative means of gathering data.

Investors are often thought of as a homogenous group, and the study aims to discover whether this is sensible, what their needs are, how far they are compatible, and what could be done if they diverge.

Singleton-Green will work alongside Robert Hodgkinson, executive director of technical strategy, relying mainly on existing research. The European Financial Reporting Advisory Group is conducting a parallel piece on the information environment of users, and the two bodies will liaise throughout.

"Realistically, we don't expect any immediate changes as a result of this study. We hope, rather, to make a contribution to the debate, to help people become better informed, and potentially promote consensus on the purpose of financial reporting and users' needs," said Singleton-Green.