Investors and analysts have questioned why some key numbers reported by company management are not required to be reviewed by auditors.
In a new survey from PricewaterhouseCoopers (PwC), respondents pinpointed adjusted earnings and industry-specific numbers, such as same store sales and revenues per unit, as key areas for attention.
Fifty six per cent of investors and analysts questioned said preliminary statements should be signed-off by auditors because the figures they contain are used to build the economic models that drive investment actions.
However, some warned that any new requirements shouldn’t have the unwanted effect of companies making fewer disclosures in their accounts.
PwC’s deputy global assurance leader, Richard Sexton, comments: “Any solution will need to balance carefully the standardisation that rules create with the flexibility that companies need in order to express themselves.”
Investors and analysts also want auditors to review how companies reach their directors’ remuneration valuations and respondents called for auditors to review the “aggressiveness” of companies’ financial statements i.e. the way judgement and accounting policies are applied.
According to the study, information currently provided in both these areas is considered relatively low-level by the investment community.