Making the running is a good way to ensure that the race is on your terms. So it was smart of six of the largest international accountancy firms to produce a paper yesterday setting out their vision for how corporate reporting should change. Now it is up to the other participants to catch up.
Naturally enough, the accountants' vision is clear on how their lives might be made easier. These include reviewing restrictions on the services they can offer and directing enforcement action primarily against individuals rather than firms. Wider acceptance that routine audits cannot be guaranteed to detect corporate fraud is also high on their list.
The main focus of the discussion, however, should be the two far-reaching company reporting changes the auditors propose. One is providing non-financial information to give a fuller business picture. The other is real-time internet-based reporting, instead of quarterly earnings statements.
The background is the wave of corporate scandals such as Enron and Parmalat. These damaged investors' faith in what companies told them and led regulators to instigate tougher regimes for companies and their auditors. There are some serious weaknesses in the current system, but these two radical proposals also carry disadvantages.
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