PracticeAuditCalls grow for new reporting model

Calls grow for new reporting model

Calls have been made to replace the current financial reporting model with one that will relieve the pressure placed on directors to hit forecasts by distorting profits.

Link: IoD defends UK corporate controls

The world’s top companies and accountancy firms have been challenged to work on a way of reporting that will combat what is thought to be spiralling short-termism in capital markets – seen as the root cause of scandals like WordCom and Enron.

The initiative to bring about change is being led by professionals at PricewaterhouseCoopers. David Phillips, European value reporting leader at PwC, said: ‘Strengthening the integrity of the reporting system on which the whole capitalist model relies is significant and one with long-lasting value.’

He said that company accounts should include more non-financial data that looks to the long-term health of a company and helps investors and stakeholders make more informed decisions. Phillips warned: ‘Let us hope some of the building blocks to create a forward-looking reporting model can be put in place before our memories fade.’

The warning has been made by UK auditors and national standard-setters for several years, but concrete moves have yet to be made by companies, regulators or governments.

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