Source: AccountingWeb

PricewaterhouseCoopers, Grant Thornton, Deloitte, KPMG, and Ernst & Young issued a report on their expectations for the future of financial reporting. It includes the possibility of real-time financial information using Extensible Business Reporting Language (XBRL), forecasts using intangibles, and possible forensic supplements to audits. The report is available at www.globalpublicpolicysymposium.com/.

The profession must consider the value of current financial statements and footnotes to investors, as well as the possibility of including more nonfinancial information.

Auditors should have greater freedom to exercise judgment in the reporting of financial information.

The report notes that, “The process for recording and classifying business information will be as important, if not more important, than the static formats in which today’s financial information is reported. Our jobs as auditors must therefore change to increasing focus on those business processes.”

XBRL will make it possible to read information in other languages and other currencies, and from other accounting systems. Approximately 40,000 companies world-wide are already using XBRL for data input.

Investors want more useful information. Significant differences between book and market values limit the usefulness of financial statements. And financial statements don’t adequately address intangibles, including creativity of employees as well as relationships with outsiders such as customers and vendors, which affect company performance.

Financial statement users may have unreasonable expectations regarding fraud detection; therefore, companies should have either regular or random forensic audits.

From AccountingWeb, www.accountingweb.com, November 27, 2006. For the complete article, click on the following link: http://tinyurl.com/yxuqfg.