ISAR Newsletter September 2014

ISAR Update

UNCTAD/WEB/DIAE/ED/2014/3
September 2014

In this issue:

 

 

UNCTAD-ISAR to hold its thirty-first session in Geneva in mid-October

The Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) of UNCTAD will hold its thirty-first session at the Palais des Nations in Geneva from 13 to 17 October 2014.Under its main agenda item, the session will address key foundations of high-quality reporting: good practices of monitoring and enforcement, and compliance mechanisms.It will include a number of panel discussions by prominent authorities and experts. Thefirst high-level segment will feature the global perspectives of regulators and standard-setters on the importance of compliance, and monitoring and enforcement for achieving high-quality corporate reporting; current global initiatives and good practices aimed at strengthening enforcement and monitoring of compliance, and their contributions to corporate-reporting improvements;mechanisms of assessing efficiency of efforts towards improving monitoring and enforcement systems; and facilitating cooperation and exchange of experiences on a global basis. Confirmed speakers for this panel include the International Organization of Securities Commissions; the Financial Stability Board, the International Forum of Independent Audit Regulators, the International Association of Insurance Supervisors; the International Financial Reporting Standards Foundation, the Global Reporting Initiative and the International Integrated Reporting Council.The second panel will consist of senior representatives of national regulatory and enforcement authorities for financial and non-financial reporting standards and codes. The panellists will explore the following topics: implementing effective compliance, monitoring and enforcement mechanisms; good practices in providing funding for enforcement institutions;maintaining consistency in high-quality control over firms in a network and among networks of firms; synergies between prudential oversight and other sectors;trends in compliance and enforcement actions; and cross-border cooperation. Confirmed speakers for this panel include senior representatives of the Securities Commission of Brazil; the Slovenia Insurance Supervision Agency; the Independent Regulator Board for Auditors of South Africa; the Danish Business Authority; the Qatar Financial Centre Regulatory Authority; the World Bank, the Financial Reporting Council of Nigeria and Deloitte United Kingdom.The second day of the session will focus on two main areas: the role of professional accountancy organizations in facilitating effective implementation and enforcement of international corporate reporting standards and codes, and country case studies on compliance monitoring and enforcement. The first panel will be composed of senior representatives of the International Federation of Accountants, the Association of Chartered and Certified Accountants, the European Federation of Accountants and the Institute of Chartered Accountants of Zambia. The second panel will feature country case studies and discussions on Australia, Belgium, Canada, Germany, the United Kingdom of Great Britain and Northern Ireland, Colombia and Peru.During the third day of the session, the Group of Experts will focus on ways and means of addressing the capacity-building needs of member States, including the Accounting Development Tool developed by UNCTAD-ISAR and training modules on the International Public Sector Accounting Standards Senior representatives of a number of other international and regional organizations dealing with accounting and corporate reporting issues will provide updates on activities that their respective organizations carried out during the intersessional period of ISAR.

To access background documentation for the session and to register, please visit our online registration site by clicking the following link: ISAR 31 registration. Additional information and updates on the thirty-first session of ISAR and the workshop can also be accessed by clicking here.

 

UNCTAD-ISAR organizing a workshop on the future direction of corporate reporting models

A workshop on the future direction of corporate reporting models will take place at the Palais de Nations, Room XXVI, in Geneva on Monday, 13 October 2014.The workshop will consider four main agenda items: first, the role of business and corporate reporting in addressing major challenges of the global development agenda; second, major trends and initiatives in corporate reporting models to deal with sustainable development issues; third, good practices and main challenges in preparing reports on those issues; and fourth, the way forward – a moderated debate on the future direction of the corporate reporting model.Confirmed speakers for the workshop include senior representatives of the United Nations Environment Programme – Finance Initiative, the Global Compact, the Group of Friends of Paragraph 47, the International Accounting Standards Board, the International Federation of Accountants, the Global Reporting Initiative, the International Integrated Reporting Council, the Climate Disclosure Standards Board, the World Business Council for Sustainable Development, the eXtensible Business Reporting Language,  the Institute of Chartered Accountants in England and Wales, and  Ernest and Young.To register for the workshop, please complete the registration process for the thirty-first session of ISAR (click on ISAR 31 registration) then complete a short registration form for the workshop (click here).

News briefs:

 

Financial Stability Board highlights potential for positive effects of financial regulatory reforms

In mid-September 2014, the Financial Stability Board presented an updated report to the Group of 20 (G20) finance ministers and central bank governors on the effect of recent financial regulatory reforms on long-term investment finance. In this report, the Board  reiterated that the most important contribution of financial regulatory reforms to long-term investment finance was to promote a safer, sounder and therefore more resilient financial system. In addition, the Board indicated that if implemented in a timely and consistent manner, the reforms would help rebuild confidence in the global financial system and reduce pro-cyclicality. These would enhance the ability of the financial system to intermediate financial flows through the cycle and for different investment horizons. The Board concluded that the G20 regulatory reform programme was supportive of long-term investment and economic growth. The reforms of the Board under consideration included the Basel III capital and liquidity frameworks, over-the-counter derivatives market reforms, regulation of institutional investors, and recent and impending accounting changes.

With respect to changes in the area of accounting and reporting, the report of the Board indicated that some of the respondents surveyed by it had stated that the use of fair value accounting for financial instruments increased volatility in measures of income and capital, which could have a negative impact on long-term investment flows. Furthermore, the report noted that some respondents had expressed concerns that fair value did not reflect the business model of long-term investors, as it could mean that short-term changes in the value of financial instruments were given undue weight, in particular from the perspective of long-term investors. Please click here to access the full report.

International Public Sector Accounting Standards Board approves conceptual framework for publication

In mid -September 2014, the International Public Sector Accounting Standards Board (IPSAS) approved for publication TheConceptual Framework for General Purpose Financial Reporting by Public Sector Entities. At its meeting held in Brussels from 15 to 18 September, the Board approved the final four chapters of the Conceptual Framework dealing with the following issues: elements of financial statements, recognition in financial statements, measurement of assets and liabilities in financial statements and presentation in general-purpose financial reports. In January 2013, the Board completed the first phase of the project and published the first four chapters covering the role and authority of the conceptual framework, objectives and users of general-purpose financial reporting, qualitative characteristics and reporting entity. The Conceptual Framework provides the Board with the basis for developing consistent and useful and related recommended practice guidelines of the Board. The framework is also intended to provide guidance to preparers in dealing with financial reporting issues that are not dealt with by the International Public Sector Accounting Standards or recommended practice guidelines. Board records indicate that the initial project brief on the Conceptual Framework was approved in November 2006.In a related development, the Board issued in August 2014 a consultation paper entitled “The Applicability of IPSAS to Government Business Enterprises and Other Public Sector Entities”.  To access additional information on this item please click here.

Institutional investors highlight lack of corporate disclosure on sustainability issues

Since its inception in 2009, the United Nations-supported Principles for Responsible Investment Initiative, that seeks to integrate environmental, social, and governance issues into investment practices. The number of signatories to the Initiative has grown to 1,200 investors, who manage assets valued approximately at $34 trillion.

PricewaterhouseCoopers surveyed a diverse mix of institutional investors who represented assets under management of more than $7.6 trillion to identify the types and sizes of institutional investors that are incorporating these issues into their investment strategies or practices and to learn specifically how they influence asset allocation, strategy, product offerings, proxy voting and/or shareholder engagement, as well as whether consideration of these issues is likely to change in the next three years.

The findings of the survey published in May 2014 show that sustainability issues are most relevant in proxy voting, shareholder-corporate engagement and investment strategy, and investors only expect sustainability issues to become increasingly relevant in the coming years. These include climate change, resource scarcity, social responsibility and good corporate citizenship. Risk mitigation is a primary driver for considering sustainability issues, as well as enhancing investment returns and generally avoiding firms with unethical conduct, but interest group pressure has little effect. Further, investors are of the firm view companies should periodically assess multiple types of risk for materiality.

Over two thirds of the institutional investors surveyed indicated that they were dissatisfied with disclosures on how risks and opportunities related to sustainability are identified and quantified in financial terms (82 per cent), comparability of sustainability reporting between companies in the same industry (79 per cent), relevance and implications of sustainability risks (74 per cent), how the reporting entity identified social and environmental impacts in its supply chain (69 per cent) and sustainability strategy that is linked to business strategy (68 per cent).

A recurring observation is the importance for securities regulators to understand how, when and with what weight investors consider these issues as they determine what disclosure requirements best serve the public markets. To access additional information on this item please click here.

European Commission publishes questions and answers on implementation of new statutory framework

On 3 September 2014, the European Commission published questions and answers with a view to facilitating implementation of the new regulatory framework of the European Union on statutory audit in a consistent manner across the Union. The main topics covered in the questions and answers deal with entry into force, next steps, structure of fees on services other than audit, prohibition of non-audit services, rotation of audit firms, audit reports, International Standards on Auditing and audit committees. The new regulatory framework consists of a directive amending the existing statutory audit directive and a new regulation on specific requirements regarding the statutory audit of public-interest entities. The regulation entered into force on 17 June 2014 and will become applicable two years later. The detailed questions and answers can be accessed by clicking here.

Audit regulators in Denmark and the United States of America enter into cooperative agreement

In July 2014, the Public Company Accounting Oversight Board in the United States announced that it had concluded a cooperative agreement with its counterpart in Denmark, the Danish Business Authority.  The agreement, which becomes effective immediately, provides a framework for joint inspections and allows for the exchange of confidential information between the two regulatory authorities.In accordance with the Sarbanes-Oxley Act of 2002, the Board is responsible for oversight and inspection of accounting firms that audit companies whose securities are traded in the United States, including foreign issuers. Among the 2,300 audit firms that the Board oversees, 900 are based outside of the United States. Since its establishment in 2004, the Board has conducted 44 inspections outside the United States.  Additional information on this item can be accessed by clicking here.

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