PracticeAuditKPMG: More assurance needed following reporting changes

KPMG: More assurance needed following reporting changes

KPMG has called for greater assurance in narrative reporting following changes to Companies Act, introduced on 1 October

KPMG IS CALLING for greater assurance in financial reports following the introduction of change to the Companies Act.

From 1 October, annual reports must include information about a company’s human rights approach, gender representation and greenhouse gas emissions. The change is part of an update to the Companies Act, which states annual accounts must contain more narrative reporting.

The ICAEW claims it is feasible for auditors to assure any or all of an annual report, if that is what investors and the public want, something KPMG has backed and is pushing further.

“It is surely an anomaly that some of the information most valued by investors is subject to the least scrutiny. We welcome the ICAEW’s report on this important area,” said KPMG partner and head of risk assurance David Matthews (pictured).

In a research paper published yesterday, “The Journey: Assuring All of the Annual Report?” the ICAEW outlined the possibility of an auditor also assuring the narrative, or front end, of reports, which it labels as “omni-assurance”.

“Regulation could be introduced to mandate greater assurance over the front end of annual reports, but regulation can be a blunt tool if not wielded carefully,” added Matthews, who also sits on the International Integrated Reporting Council (IIRC). 

“If we are serious about restoring trust in corporate reporting, then greater assurance over front end statements is surely a vital element in making that happen,” he said.

Amendments to the Companies Act sees the introduction of a strategic report, which will succeed the current business review. The change is designed to help companies “tell their story” which will include strategy, business model, principle risks and challenges the organisation has faced.

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