See Bios and Methodologies to gain some understanding as to these aspects of the books.
The project started in 2012 with looking at ethical considerations of financial reporting. Much has changed to the regulations and auditing requirements since but back then…. Tax avoidance seemed to be an interesting area. But then Starbucks voluntarily paid an amount greater than they strictly had to. So it was clear the shareholder and wider stakeholder environment had changed. Tax avoidance was no longer quite so acceptable. PwC initially extended much help, later withdrawn. We developed what we called hybrid reporting – several reports rather than just one report. We canvassed opinion. Financial reporting was expanding into Corporate Reporting and the newish Integrated Reporting, which we think has taken a few wrong turns. Integrated reporting was the antithesis of our preferred hybrid reporting – where different users/stakeholders would look at that relevant bit of the total report that they found useful.
The FRC was then very helpful but we had some great reservations. After talking to a cross-section of users of financial reports it become clear that there was much dissatisfaction. So we extended our evidence gathering in a more systematic way. Then the Tesco scandal happened and that led to a greater examination of external auditing – the final external check and balance for financial regrets and in particular the annual report.
More collection of evidence gave rise to deep seated issues especially with the expanding narrative sections of the annual report and changing standards and valuation principles. The financial reporting and auditing regulations yielded their own special breed of insoluble problems (such as reducing the choice for one of the Big Four). Finally Carillion confirmed that this was an accident waiting to happen. So we expanded the gathering of evidence and the subject matter.
Since the global financial crisis of 2007–9, new laws and regulations have been introduced with the aim of improving the transparency in financial reporting. Despite the dramatically increased flow of information to shareholders and the public, this information flow has not always been meaningful or useful. Often it seems that it is not possible to see the wood for the trees. Financial scandals continue, as Wirecard, NMC Health, Patisserie Valerie, going back to Carillion (and many more) demonstrate. Financial and corporate reporting have never been so fraught with difficulties as companies fail to give guidance about the future in an increasingly uncertain world aided and abetted by the COVID-19 pandemic.
This concise book argues that the changes have simply resulted in an increase in the use of corporate PR, impression management, bullet points, glossy images, and other simulacra which allow poor performance to be masked by misleading information presented in glib boilerplate texts, images, and tables. The tone of the narrative sections in annual reports is often misleading. Drawing on extensive research and interviews with insiders and experts, this book charts what has gone wrong with financial reporting and offers a range of solutions to improve information to both investors and the public. This provides a framework for a new era of forward-looking corporate reporting and guidance based on often conflicting multiple corporate goals. The book also examines and contrasts the latest thinking by the regularity authorities. Providing a compelling exploration of the industry’s failings and present difficulties and the impact of future disruption, this timely, thought- provoking book will be of great interest to students, researchers, and professionals as well as policy makers in accounting, financial reporting, corporate reporting, financial statement analysis, and governance.
The three volumes (so far) are:
Disruption in the Audit Market: The Future of the Big Four
Financial Failures & Scandals: From Enron to Carillion (and beyond [to Wirecard and the Gupta empire])
Disruption in Financial Reporting: a post-pandemic view of the future of corporate reporting
The latest volume covers the new regulations being introduced with the aim of improving transparency in financial reports. Despite a plethora of changes to rules and regulations, the quality of information to shareholders and the public has deteriorated. Trust with the audit has waned. Financial and corporate reporting have never been so fraught with difficulties as companies fail to give guidance about the future in an increasingly uncertain world aided and abetted by the COVID-19 pandemic. Drawing on extensive research and interviews with insiders and experts, this book charts what has gone wrong with financial reporting and offers a range of solutions to improve transparency to both investors and the public. Providing a compelling exploration of the industry’s failings, and the impact of future disruptions, this timely text will be of interest to students, researchers, professionals and policy makers in financial reporting and accounting.