 "EY Survey on reporting standards: What spooks corporate India?")
Audit committees and boards have become more demanding, making it challenging for companies to meet reporting standards.
A survey, titled Are You Prepared for Corporate Reporting's Perfect Storm?, on reporting standard quizzed 40-odd India-based chief financial officers (CFOs) and financial controllers of large organisations.
The survey found that the top priorities of Indian CFOs and finance controllers were to build a more collaborative relationship with the audit committee and board, upgrade the information technology infrastructure, and harness big data and analytics to enable better reporting. Accordingly, all the Indian respondents were expected to increase investment in reporting technologies over the next two years. The increase in India would also be significantly higher than at the global level - 70 per cent in India expect to increase spend by 20 per cent against 20 per cent globally.
However, corporate India said the main external challenges for reporting were satisfying the differences in reporting standards, and the changing expectations around reporting formats. Indian business said over the past three years, they have experienced a significant increase in attention on reporting from audit committee and boards, investors, including financial institutions and pension funds, analysts, and external regulators (including SEC, FCA UKLA, FSA Japan and EU).
In the survey, respondents said there was a need to improve the IT infrastructure to improve reporting. "The lack of integration, data quality and dated IT architecture are the main technology barriers," the survey said.
Forty-eight per cent of the Indian respondents identified data consistency as a top challenge.
Most Indian companies agreed they found it challenging to meet the demands of the audit committee members. Around 30 per cent of Indian respondents said they needed to improve the information shard with the audit committee.
Pankaj Chadha, a partner in Indian member firm of EY Global, said corporate India was implementing multiple changes, auditor rotation, Ind-AS Accounting Standards, the goods and services tax etc. "The stretch these changes have put on skills available with the finance teams is not the only concern for the boards, but they are also concerned with the lack of use of technological solutions that address these changes on a long-term basis," he said. This was more so as board's duties and responsibilities in terms of corporate reporting have also become more onerous. "This has resulted in directors having a sharper look at submissions to them and asking more questions."
The survey noted that Indian organisations needed to build strong and trusted relationships with audit committees and boards, and understand their needs. "It is important that Indian organisations strengthen relationship with the audit committee and board to create more confidence in the data provided," the survey said.
According to Chadha, the key to building relationships with stakeholders was to work in a planned manner to ensure that attention to all stakeholders was suitably balanced, particularly when the magnitude of change in regulations and corporate reporting was so significant.
"A well-laid-down communication plan for all stakeholders not only improves engagement but also makes such engagement more useful and effective," he added.
| SURVIVING THE CORPORATE REPORTING STORM |
The top drivers of effective reporting
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100%
Number of Indian companies to increase spend
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70%
Number of Indian companies that expect to increase their spend greater than 20%
