The audit of corporate reporting on the internet challenges and institutional responses
This presentation is the property of its rightful owner.
Sponsored Links
1 / 22

The Audit of Corporate Reporting on the Internet: Challenges and Institutional Responses PowerPoint PPT Presentation


  • 80 Views
  • Uploaded on
  • Presentation posted in: General

The Audit of Corporate Reporting on the Internet: Challenges and Institutional Responses. Andrew Lymer University of Birmingham & Roger Debreceny Nanyang Technological University, Singapore. Click for Paper. Overview. Background Issues facing auditors Professional Pronouncements

Download Presentation

The Audit of Corporate Reporting on the Internet: Challenges and Institutional Responses

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


The audit of corporate reporting on the internet challenges and institutional responses

The Audit of Corporate Reporting on the Internet: Challenges and Institutional Responses

Andrew Lymer

University of Birmingham &

Roger Debreceny

Nanyang Technological University, Singapore

Click for Paper


Overview

Overview

  • Background

  • Issues facing auditors

  • Professional Pronouncements

    • Non-auditing specific

    • Auditing specific

  • Technological developments in reporting

  • Research Needed


Background

Background

  • Paper based periodic reports

  • Selected Investor Meetings

  • Physical AGMs/EGMs

  • Investor Relations websites

  • Webcast Meetings

  • Electronic Proxy

  • Interactive reporting

  • Video conferencing

  • Electronic voting


The audit of corporate reporting on the internet challenges and institutional responses

Background

Table 2: Comparison of percentages of top 50 (Allam) or top 30 (IASC) companies in

geographic domains who provide key elements of an annual report on their Website

for accounting periods ending to end 2001 (Allam) or mid 1999 (IASC)

Source: from Table 3 Allam & Lymer, 2002 p10 and Table 6 in IASC 1999 p55


Issues facing auditors

Issues facing auditors

1. Scope of Verification

  • Drawing the boundary

  • Provision of wider range of information

  • Depth of data

  • Forward Looking reports


Issues facing auditors1

Issues facing auditors

2. Functions of Verification

  • Organisation wide information systems

  • Boundaries of organisations

  • Role for continuous audit?


Issues facing auditors2

Issues facing auditors

3. Assigning responsibility in the audit function

  • Sharing of risk v limited liability

  • New players in verification market

    4. Justification of the statutory audit

  • Value added?

  • Cost coverage of wider audit remit


Issues facing auditors3

Issues facing auditors

5. Other issues

  • Is the audit opinion safe from change by the client or other party?

  • Should the web-based auditor's report reside at the auditor's or the client's website?

  • What weight should be given to an auditor's report date when documents on the web can be changed?

  • Should the auditor allow hyperlinks to, and/or from, the auditor's report?

  • Auditor's report look and feel when available online

  • The expression of authority of audit statements

  • What does ‘signing’ actually mean in online context?


Professional pronouncements

Professional Pronouncements

1. Non-specifically auditing related regulations and standards

  • Securities Market Regulators

    • SEC, COB, LSE, TSE

    • COB (2000) - calls for effective auditor guidance or will regulate


Professional pronouncements1

Professional Pronouncements

  • Accounting Standard Setters

    • IASC Discussion paper

      • indicating whether specific items of data had in fact been subject to external verification,

      • which GAAP (or GAAPs) had been so audited,

      • how excerpts from financial statements, and their related audit statements, should be shown if made available outside of the context of the full statements in an annual report

      • use of different languages

      • …...


Professional pronouncements2

Professional Pronouncements

  • Accounting Standard Setters cont

    • AICPA/FASB

      • Active groups in area eg the Jenkins Committee Report (94) and the Elliott Committee Report (96)

      • 'Business Reporting Research Project’ - Jan 98

        • 'Electronic Distribution of Business Reporting Information’ Jan 2000

        • democratisation of business reporting

        • changes in the reporting model

        • completeness of reports

        • timeliness

        • variability of content


Professional pronouncements3

Professional Pronouncements

- Accounting Standard Setters cont

  • ASB

    'Year-end Financial Reporting Structure' project

    Discussion Paper February 2000

    Standards for Internet reporting?


Professional pronouncements4

Professional Pronouncements

- Other Groups

  • ICAS - ‘Business Reporting - An Inevitable Change?’

    • Database reporting model

    • Audit processes instead of outputs

    • Different assurance levels for different levels of data

    • Better understanding of use of non-financial indicators

    • Demand for wider assurance services

    • Skills base to deliver wider range of services


Professional pronouncements5

Professional Pronouncements

- Other Groups cont.

  • ICSA Best Practice Guide for Electronic Shareholder Communications - March 2000

    • Form of the audit report when delivered online?

  • UK Electronic Communications Act

    • May 2000 - effective December 2000

    • All forms of shareholder communications can be electronic

    • Voluntary reporting becomes statutory fulfillment?

    • Early to see full effect


Professional pronouncements6

Professional Pronouncements

2. Auditing Standards

Trend -

1. Ignore online reporting as solely communication medium (USA)

2. Changes the whole nature therefore too big

to handle (initial UK)

3. Pick up bits where guidance can be offered

(Australia and recent UK)


Professional pronouncements7

Professional Pronouncements

2. Auditing Standards cont

  • USA

    • AU550 (SAS 8 interpretation) March 1997

    • Website not equal ‘other documents’

    • Auditors can ignore

    • Various AICPA task forces and panels monitoring position

    • Practice Alert 97-1 (current)

      • AU550 still valid

      • Boundaries around audited information necessary


Professional pronouncements8

Professional Pronouncements

2. Auditing Standards cont.

  • Australia

    • AGS1050 - December 1999

    • clarity over responsibilities

    • need for specific auditor training

    • presentation of audited v unaudited data

      • not displayed together

    • referencing and signatures

    • active monitoring of audit report use

    • special reports for selective info presentation


Professional pronouncements9

Professional Pronouncements

2. Auditing Standards cont.

  • UK

    • Bulletin 2001/1 ‘Electronic Publication of Auditors Reports’ - Jan 2001

    • reflects many of AGS1050 issues for UK

    • BUT audit report should be largely common for all reports plus

    • dating still valid (no evergreen reports?)

    • responsibility for checking conversion from audited manual to electronic


Technological developments in reporting

Technological Developments in reporting


The audit of corporate reporting on the internet challenges and institutional responses

XBRL: The Standard for Publishing

and Distributing Financial Information

Printed

Financials

Accounting

System

Regulatory

Filings

Investors

XBRL

Website

XBRL

Generation

Interpretation

Other

Sources

Tax

Returns

Other

Parties

Bank

Filings


Research needed

Research Needed

  • Examples :

    • Actual Usage

      • e.g. how companies using audit reports in conjunction with online information

    • Judgment Studies

      • users influenced by verification process when reports online?

    • Demand for Assurance Services

      • what demand exists?

      • Funding models?

    • Impact of Legislation Changes

      • ECA etc


Conclusion

Conclusion

  • Online reporting common

  • Move from voluntary to statutory

  • Traditional audit techniques may be of reduced use

  • Need for useful guidance becoming important

  • Bigger technological issues on the horizon to be addressed


  • Login