50 years ago in the October 1962 CAmagazine

The October 1962 edition of CAmagazine discussed the “Need for reform in the Bankruptcy Act.” It stated that: “Bankruptcies and their attendant losses have become a most pressing problem…. A tremendous volume of business is presently conducted in Canada by ‘thin’ corporations — where the shareholders have very little of their own money in the company. [One] might well remark that such a corporation should not be given credit…. Our present Bankruptcy Act … displays no recognition, whatsoever, of the need of a separate set of ‘ground rules’ in dealing with corporations.”

Also, read about the “60th Annual Conference” (from the summary of the CICA annual meeting in Fredericton, New Brunswick) and “The new management theories make for poor performance” (a summary of “Executives who can’t manage,” from The Atlantic Monthly, July 1962).

The future of corporate reporting: a review article (2000)

 

In a research article published in 2000, Professor Vivien Beattie noted that: “Significant changes in the corporate external reporting environment have led to proposals for fundamental changes in corporate reporting practices. Recent influential reports by major organisations have suggested that a variety of new information types be reported, in particular forward-looking, non-financial and soft information.”

This paper presents a review and synthesis of these reports and provides a framework for classifying and describing suggested information types. The academic antecedents for certain current proposals are identified and the ambiguous relationship between research and practice is explored. The implications for future academic research are discussed and a research agenda is introduced.

For additional insight, read the article “The future of corporate reporting: a review article” by Vivien Beattie published in the Irish Accounting Review 2000, 7(1), pages 1-36. As well, refer to the 1991 landmark research study called Information to be included in the Annual Report to Shareholders published by the Canadian Institute of Chartered Accountants (CICA). This 317-page study was drafted by J. Paul-Emile Roy, CA under the direction of a seven-member Study Group chaired by Gerald Trites, FCA.

Information to be included in the Annual Report to Shareholders – 1991 Research Study updated 2008

In 1991, the Canadian Institute of Chartered Accountants (CICA) published a landmark research study called Information to be included in the Annual Report to Shareholders. This 317-page study was drafted by J. Paul-Emile Roy, CA under the direction of a seven-member Study Group chaired by Gerald Trites, FCA.

The Foreword to this study states: “The annual report has long been used by an enterprise as a primary vehicle of communication, not only with its investors or members, but also with other audiences who, for a variety of reasons, have a legitimate interest in the affairs and operations of the enterprise. Generally, the annual report contains the financial statements and associated notes. It also contains additional information which both elaborates upon the financial condition and operating results of the enterprise and provides non-financial information of interest and value to its audiences.”

It further notes: “To date, accounting and auditing standards have concentrated on the financial statements. They have paid relatively little attention to information outside the financial statements, which, to a large extent, has been regarded as the domain of the enterprise’s management. It is considered, in many circles, that a greater amount of discussion and analysis of the financial information needs to be provided than that currently contained in notes to the financial statements. This has resulted in a greater scrutiny being given to such matters, particularly by regulators such as the securities commissions.”

In addition, it states that “some concern has been expressed about the general quality of annual reports, which varies significantly among enterprises. It has been noted that the annual report has the potential of being "a shining affirmation of the company’s scope, strength, philosophy and aspirations"; on the other hand, "it can be dismal, ineffectual and boring - a wonderful opportunity lost".”

To address these matters, the CICA Accounting Standards Committee was prompted, in May 1989, to commission a research study to discuss the objectives of the annual report to shareholders and to recommend what information should be provided, beyond that which must be presented in the financial statements, to assist in achieving those objectives. Besides addressing information content, the study considers the form and presentation of information, reviews the concept of effective communication and considers annual reporting formats, summary reporting, graphics and other presentation matters.

It is noteworthy that this research study was updated and re-published by the CICA in 2008, under the title Corporate Reporting to Stakeholders (also refer to the August 25, 2008 blog posting). The updated study was prepared by J. Paul-Emile Roy, CA (author of the 1991 study) under the direction of a seven-member Study Group chaired by Gerald Trites, FCA (chair of the 1991 Study Group). It aims to promote effective communication between a company and its stakeholders by providing useful guidance to preparers of corporate reports. It is based on an in-depth review of the annual reports and websites of 125 companies that participated in the ongoing CICA Corporate Reporting Awards program. In addition, this study examines practices and significant trends in corporate reporting by analyzing:

·       more than 50 different types of information disclosed in 2004-2005 annual reports;

·       major changes in the 2004, 2005 and 2006 annual reports of award-winning companies;

·       information content, presentation and navigation on company websites in 2007.

Award for Excellence in Annual Reporting by Crown Corporations

Annual reporting is an important vehicle for accountability. In 1994, the Office of the Auditor General of Canada (OAG) launched the Award for Excellence in Annual Reporting by Crown Corporations. The program aimed to promote enhanced accountability through improved disclosure of information on corporate performance by recognizing Crown corporations that do this well. Awards were presented in two categories based on corporation size.

According to the Report of the Auditor General of Canada, 1993 (Chapter 4, paragraph 4.72): “The annual report gives management and boards of directors an opportunity to report to shareholders on how they have fulfilled their responsibilities. The private sector has shown considerable interest in the role of the annual report, and its importance is widely acknowledged. Both the Canadian Institute of Chartered Accountants (refer to the 1991 research study, Information to be included in the Annual Report to Shareholders) and the Society of Management Accountants of Canada have issued research reports detailing information that should be included in the annual report, and these are excellent references.”

It is clear that information on financial results alone does not adequately address the full range of stakeholders’ interests and information requirements. Because they deliver a mix of public policy and commercial objectives, improved performance reporting is especially important in the case of Crown corporations. The practice of reporting on performance in annual reports, though much improved, still has a way to go. The first important steps are: reporting against all objectives; stating objectives in more measurable terms; and reporting performance information that focuses principally on outputs and outcomes. Also, more attention needs to be given to providing more comparable and consistent information on parliamentary funding.

After operating this program for 12 years, the OAG transferred the administration of the Award for Excellence in Annual Reporting by Crown Corporations to the Canadian Institute of Chartered Accountants (CICA) in 2006. The CICA has incorporated the OAG program into its own annual Corporate Reporting Awards program (see the previous postings on November 17, 2010 and June 9, 2011).

CCAF-FCVI – 25th Anniversary Journal 2005

The CCAF was originally called the Canadian Comprehensive Auditing Foundation but, in recent years, the name was contracted to CCAF-FCVI. The CCAF is a national non-profit foundation, established in 1980. Its primary activities are research and education. Established as a public-private sector partnership, the CCAF is funded by the federal and provincial governments and the private sector. Its vision is the achievement of excellence in public sector governance, management and accountability.


The CCAF focus is on public sector organizations that operate in an environment of complex accountability relationships. These include governments, institutions and organizations that create, deliver or regulate activities that support the health, educational, social and economic well-being of Canadians.

To mark its 25^th anniversary in 2005, the CCAF published CCAF-FCVI – 25th Anniversary Journal. The Journal includes articles from various senior officials focusing on their own experiences and activities in the areas of public sector accountability, audit, management and governance. It also includes a brief history of the CCAF's research program over the last 25 years (pages 95-106).

CICA Corporate Reporting Awards celebrate 60 years of excellence

This year marks the diamond anniversary of the Chartered Accountants of Canada’s Corporate Reporting Awards. Since 1941 the program has been centre stage in Canada’s evolution to best practice reporting models.  By providing important recognition for those committed to advancing business reporting, the program has helped drive the development of best practices in financial reporting, corporate governance disclosure, electronic disclosure and sustainable development reporting, all of which are now regarded as essential components of the corporate reporting model. Judging organizations include the Canadian Institute of Chartered Accountants (CICA), PricewaterhouseCoopers, Ernst & Young, Deloitte, International Institute for Sustainable Development, Canadian Investor Relations Institute, and Toronto CFA Society.  (Read the article “Corporate Reporting Awards celebrate 60 years of excellence” in the June-July 2011 issue of CAmagazine online.)

Corporate Governance and the New York Stock Exchange

The New York Stock Exchange (NYSE) has long been a leading proponent for the highest standards of corporate governance and ethical behaviour. Its listing standards have included governance rules for approximately 150 years. It was the NYSE that first required companies to issue regular financial statements, as well as to provide quarterly earnings announcements and conduct independent audits of financial statements, all of which were included as part of the NYSE’s listing standards before any of the federal securities legislation coming out of the Great Depression. The leadership role of the NYSE on governance matters continued during the middle of the 20th century, when the NYSE pioneered such developments as required proxy statement distribution, a minimum number of outside directors, and audit committees made up entirely of independent directors. To learn more about the NYSE and governance, read the Report of the New York Stock Exchange Commission on Corporate Governance (September 23, 2010). The report contains a summary of significant corporate governance developments since 2000 (pages 10-23).

CICA - Performance and Environmental Reporting Research

Since 1980, the Canadian Institute of Chartered Accountants (CICA) has published a number of research studies on performance and environmental reporting. Most are available as PDF downloads free-of-charge. To view and/or download selected publications, visit the CICA website.

CICA - Accounting and Financial Reporting Research

Over the last 30 years, the Canadian Institute of Chartered Accountants (CICA) has published many research studies on accounting and financial reporting. Most are available as PDF downloads free-of-charge. To view and/or download selected publications, visit the CICA website.

CICA Chronology of Sustainability Initiatives

The Canadian Institute of Chartered Accountants (CICA) has been addressing environmental accounting and reporting issues for almost 20 years. It was a founding member of the Global Reporting Initiative (GRI), whose guidelines for reporting on the social, environmental and economic aspects of a company’s operations are used today around the world. The CICA has also been addressing climate change issues for more than 10 years. It recognized early on the business, accounting and tax implications of climate change impacts and greenhouse gas reduction efforts. It was the first accounting body in the world to publish guidance regarding disclosures about climate change. The CICA Chronology of Sustainability Initiatives provides hyperlink access to PDF documents of selected research and guidance publications issued between 1992 and 2009.