Question

How do you see the financial reporting requirements for companies shifting in 10 to 20 years? Are they going to become more stringent or more relaxed? Are countries across the globe going to standardize their filings into a single system?

Answer 1

Greetings,

With advent of more and more complex financial products in the marketplace, it is definite that financial reporting requirements are going to be more stringent in the near future. One such instance can be noticed in accounting for leases - whereby both FASB and IASB are planning to eliminate accounting for operating leases. So in future we will see that all the leases need to be capitalised irrespective of the terms and conditions of the contract. This is decided to restrict the abuse of provisions of operating lease to show various liabilities of the entity off balance sheet by designing the lease terms in such a manner that requirements of financing lease are not met. Similarly accounting for derivatives is becoming more and more complex and rule based.

As far as accounting standards are concerned, all the countries across the globe bradly follow either IFRS or US GAAP. Both the bodies IASB & FASB are working together to align the requirements of both the standards to ensure comparability across the globe.

As far as regulatory filings are concerned, most of the developed countries have integrated various filings into single system. But same is not true for all the countries where multiple agencies exist to oversee a company and hence two agencies may ask for the duplicate filings from the same company. Such countries like India are working on the same such that data redundancy can be minimised.