Better Financial Reporting med udgangspunkt i væsentlighed

Patrick Alexander Dirchsen

Studenteropgave: Kandidatafhandlinger

Abstrakt

This thesis has been prepared in connection with the termination of MSc in Business Administration and Auditing at Copenhagen Business School in the spring of 2016. The subject of this thesis is Better Financial Reporting, and the primary objective is to prepare Best Practice in financial reporting annum 2020. In this connection materiality is of great importance, considering the fact that very long and complex annual reports typically do not focus on the most important and relevant elements, which is a disadvantage to the accounts user. In addition to materiality the thesis focuses on the drawing up of financial reporting and the related functionality/technology. On 28 October 2015 IASB published an exposure draft of ”Applying the concept of materiality” due to the fact that the accounting extent of important companies has been steadily increasing for a number of years. Even if a standard establishes that a specific piece of information has to be included, e.g. in a note to the accounts, the information can – and should be – omitted provided that it is not important. Materiality shall be evaluated both regarding quantitative and qualitative factors. During the preliminary studies financial reporting of the Danish OMX C20 Index has been examined using a number of objective parameters and a number of international trends have been described. It can be concluded from a general point of view that financial reporting is currently being changed and that the companies try to adapt themselves to development. It should be questioned whether the PDF format is suitable for continued development in financial reporting, or whether other reporting forms, e.g. the web, might be more suitable. Subsequently, as part of the thesis a questionnaire survey was made for professional accounts users as well as interviews with eight companies selected from the OMX C20 Index about their financial reporting based on materiality. The results of the questionnaire survey show, among others, that the financial reporters have to consider information with care and not attach the wrong importance to the cutting clutter principle, i.e. that as much as possible has to be cut off. At the same time it should be mentioned that certain measures to improve the annual reports in PDF – aiming at improving the virtual impression – have relatively limited value for the accountants users. In-depth interviews have been made with some of the most important Danish companies like A.P. Møller - Mærsk A/S, Novozymes A/S, ISS A/S, Carlsberg A/S, Novo Nordisk A/S, Genmab A/S, Chr. Hansen Holding A/S and FLSmidth & Co A/S. Some of the above companies use their own internal instructions for materiality handling, one of them being, A.P. Møller - Mærsk, with the most detailed and specific Disclosure Framework. Besides, A.P. Møller - Mærsk’s Lead IFRS Compliance Officer said that in practice the materiality threshold will always be lower for easily obtainable information, no matter whether your own costs for inclusion of information from a theoretical point of view have no importance. Many of the companies expressed that previously the company's external auditors over-interpreted IFRS because they did not relate to the consideration of materiality of IAS 1. However, most of the interviewed companies are of the opinion that the auditors have started softening up considerably and accept a more extensive use of materiality. Many of them have an eye on their competitors for example when evaluating materiality, but not from abroad. The reason why is that the foreign companies are subject to different codes of practice due to the governments' additional national requirements and directives etc. Novozymes and TDC are the most advanced companies within the field of web reporting among the OMX C20 companies, whereas many of the other C20 companies have informed the author of this thesis that they are following the development in web reporting. Certain companies' basic attitude to cut down the annual report to a minimum is not the general procedure and point of view of the companies interviewed. Therefore this is not the intention of Best Practice in Financial Reporting Annum 2020 of this thesis and it is not aimed at companies with a lowcost approach to their financial reporting. Based on studies and analysis of presentation of accounts and the interviews carried out, it has to a certain degree been possible to prepare proposals for the companies' materiality handling and to forecast the development in financial reporting. Generally speaking it can be verified that the PDF format offers you limited possibilities to meet all requirements. A combination of web and print (PDF) will take into account most accounts users. A report prepared by the Federation of European Accountants, FEE, and additional interviews are supporting the fact that the development is moving towards a modernised way of reporting. Regardless of the fact that web reporting offers the possibility of many data it does not mean that immaterial information should be included. Therefore materiality should be handled in the same way on the web as in the traditional annual report. Materiality and web reporting are the two key areas on which Best Practice of this thesis is built. Materiality is a question of the right balance, and web reporting should be used as ”best practice” as the primary reporting form in the year 2020. It is not appropriate to include immaterial information in web reporting, no matter whether there is room for it. Therefore materiality has to be handled in the same way in web reporting as in the traditional annual report in PDF, contributing at the same time to a more gradual transition to web, for example in the year 2020. It would be an advantage to draw up an internal Disclosure Framework in order to determine the management's views on the purpose of financial information, the importance of notes and their limitations, and how to present the information in the most effective way possible to the accounts users on the web and/or PDF. It might be difficult for financial reporters to make sure that no immaterial information is included and at the same time to make sure that all material information is included. Most professional accounts users find it most important to include all material information rather than the risk of the opposite. This is why financial reporters should not sort out immaterial information to such an extent that they run the risk of sorting out material information by a mistake. Welcome to Best Practice in financial reporting annum 2020.

UddannelserCand.merc.aud Regnskab og Revision, (Kandidatuddannelse) Afsluttende afhandling
SprogDansk
Udgivelsesdato2016
Antal sider243