International accounting and Reporting issues: 2006 Review

Through the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR), UNCTAD has provided an intellectual home and an open forum for considering issues of corporate transparency — such as financial reporting, corporate governance and corporate responsibility — that have important implications for the economic development of member States. The twenty-third annual session of ISAR was held in Geneva from 10 to 12 October 2006. This session addressed issues central to current challenges in corporate transparency, including the practical implementation of International Financial Reporting Standards (IFRS), the use of corporate responsibility reporting in annual reports, and the promotion of good practices in corporate governance disclosure.

The globalization of the investment community is putting new demands on comparable financial reporting. While the year 2005 saw an unprecedented number of enterprises and countries around the world adopt IFRS as their basis for financial reporting, 2006 witnessed the ongoing practical implementation of these new standards. This presents a number of challenges, including the need to be sensitive to the circumstances of small and medium-sized enterprises (SMEs), while fostering a consistent implementation of the standards.

Meanwhile, the same social and economic forces that are shaping global trade and development are also driving changes in the type of information various stakeholders want from companies. Enterprises have begun to recognize the value that environmental, social and governance reporting has in building investor confidence and stakeholder support. Over the longer run, experts agree that the current practice of financial reporting will need to be complemented by more non-financial information, including both corporate responsibility reporting and corporate governance disclosure.

Building an appropriate institutional framework and implementing robust corporate reporting requirements are essential to the broader process of economic development. These issues are at the centre of ISAR’s work. It is my hope that policymakers, regulators, members of boards of directors, corporate executives, academics and other readers interested in advancing corporate transparency issues will find this publication to be a timely and useful resource.