Investors should be placed at the heart of global financial and accounting standards, say ACCA and Grant Thornton in a new report. However, the pair warns that investors' views on shaping future standards are not being heard.
They also say that the piecemeal, fragmented way in which solutions to global economic uncertainty are proposed and the lack of focus on investors in the reform process prolong global economic fragility.
"Investors should be the primary focus for global financial and accounting standards, yet their voices are not being clearly heard," says Sue Almond, director of technical at ACCA. "Investor opinion is not seen as a reference point against which to prioritise issues, nor does it drive an agenda for a continuous improvement in transparency and measures to meet the needs of shareholders."
While investors don't always speak with one voice and the investor community opinion isn't necessarily homogenous, Almond says this doesn't mean all voices should be ignored.
Investors are keen to raise their profiles with standard setters and regulators to ensure their needs are prioritised when reforms to the financial reporting system are debated.
The report, "Putting Investors at the Heart of the Financial System," notes that investors would like to see new and improved accounting, auditing, and corporate governance standards developed in a more integrated manner.
Investors also seek comparable information on financial statements and the application of audit and accounting standards.
The report also notes that integrated reporting is seen as representing an opportunity to fill some information gaps. Its closer alignment of risk management and performance could enhance investor confidence in management's ability to perform in future.
Wider adoption and enforcement of corporate governance frameworks is seen as valuable by investors. In some regions, improved corporate governance was seen as the highest priority for improving investor confidence.
There is also a desire for more information on the audit process and any issues identified, as well as information on the effectiveness of a company's management and corporate governance. Investors would be willing to pay for greater assurance if it provided more value.
"Investors are willing to explore new approaches to developing financial reporting reforms," says Steve Maslin, chair of the Grant Thornton partnership oversight board. "They support the concept of a more integrated process that emphasises the interrelated nature of accounting, reporting, auditing and corporate governance standards and regulations."
Investors, Maslin adds, fully endorse the prioritising of investor needs, ensuring that any proposals for reform begin first with a sound analysis and understanding of the challenges investors face and their most urgent priorities for improvement.
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