March 2021 – Hilde Blomme, Accountancy Europe Deputy CEO & professional expertise team leader, presented Accountancy Europe’s recommendations to reinforce the financial reporting ecosystem with respect to fraud and going concern to IWP’s members. These recommendations were originally set out in two papers published on Accountancy Europe’s website (links below). Read more by downloading the full article below.
When a company collapses, all stakeholders are affected, from employees to investors, and it eventually erodes the public’s trust in financial markets. The COVID-19 crisis has further increased the pressure and made companies more vulnerable to fraud and corporate failures.
This has led Accountancy Europe to issue two publications (and their summaries) with recommendations to strengthen the financial reporting ecosystem, respectively on:
Fraud and going concern issues are often correlated. Fraud can threaten a company’s ability to continue as a going concern; it deteriorates investors’ trust in the company and can lead to its failure. Conversely, fraudulent behaviour may aim to hide a company’s going concern issues.
Auditors and all other stakeholders in the financial reporting ecosystem (companies’ boards and management, legislators, standard setters, regulators, public oversight authorities) are crucial to improving its resilience. Our publications propose to re-define their roles and interactions and call for a joint and coordinated effort between all parties to achieve tangible results.
The pandemic has shown that it is impossible to prevent all corporate failures. However, a stronger financial reporting ecosystem could enable entities to timely adopt preventative measures or better manage their consequences.
Recommendations for a stronger ecosystem
Our recommendations focus on financial reporting and audit of European public interest entities (PIEs). Some may also be relevant for non-PIEs and their auditors. The recommendations start from the requirements in relevant international standards and EU legislation.
The full article is available below, and was originally published on IWP Journal.