Financial Reporting & Audit

High-quality financial reporting is the bedrock of capital markets, providing investors and stakeholders with reliable information about a company's financial position, performance, and cash flows, and enabling informed investment and lending decisions.

Financial reporting is governed by accounting standards (IFRS or national GAAP), auditing standards (ISA), and regulatory requirements. The convergence of financial and sustainability reporting — with the ISSB standards sitting alongside IFRS accounting standards — represents a fundamental shift toward integrated corporate reporting.

Accounting Standards

The International Financial Reporting Standards (IFRS), issued by the IASB, are used in over 140 jurisdictions. US GAAP remains the standard for US-listed companies. Both frameworks require fair presentation of financial position, comprehensive income, changes in equity, and cash flows. The quality of financial reporting depends on the consistent and faithful application of these standards, supported by robust internal controls and independent audit.

External Audit

Independent external audit provides assurance that financial statements are free from material misstatement. The International Standards on Auditing (ISAs), issued by the IAASB, establish the requirements for audit quality. Key audit matters (KAMs) — issues of most significance in the audit — must be communicated in the auditor's report, providing investors with insight into areas of judgement and risk. The extension of assurance to sustainability information (through ISSA 5000) represents a major evolution in the audit profession.

Internal Controls

Effective internal controls over financial reporting (ICFR) are essential for ensuring the reliability of financial information. Many jurisdictions require management to assess and report on the effectiveness of ICFR, and some require auditor attestation. The COSO Internal Control Framework provides the most widely used framework for designing and evaluating internal controls.

Further Reading

• IFRS Foundation — International accounting and sustainability standards
• IAASB — International auditing standards

Related Topics

• Non-Financial Disclosure
• ESG Assurance
• Risk Disclosure