Using Big Four improves disclosure quality

Using Big Four improves disclosure quality

Companies using Big Four auditor provide better quality IFRS disclosures, Cass Business School study finds

COMPANIES THAT have a Big Four auditor are likely to provide better quality disclosures in financial statements prepared under IFRS, independent research has found.

Research from Cass Business School also found that high-quality financial reporting practices are more likely to be observed by companies operating in countries with stronger regulatory regimes.

According to the study, there is “considerable variation” across European countries in compliance with some impairment disclosure requirements, suggesting uneven application of IFRS.

Peter Pope, author of the report and director of the Centre for Financial Analysis and Reporting Research at Cass, said the research suggests the need for more effective accounting oversight.

“There is considerable scope for improvement in the application of IFRS by some European-listed companies. Until such improvements occur, the economic benefits claimed for harmonised financial reporting in this region and beyond may well remain elusive,” said Pope.

The report, which looked at the financial statements of 4,474 listed companies from the EU and Switzerland, also raised concerns about the use of boilerplate language to alleviate the burden of compliance.

“The pressure on senior finance executives to support compliance with IFRS is not always prioritised as it should be,” the report said. “While use of boilerplate language may be a means to fast-track the meeting of reporting requirements in the short-term, disclosures should be reviewed regularly and on a timely basis. Failure to do so can expose companies to risk which can have implications on future reporting periods and, in a worst case scenario, could impact company reputation if restatements are subsequently required.”

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource