FOR IMMEDIATE RELEASE:
New FEI Research Provides Valuable Resources on Fraud Prevention and Financial Reporting
Annual Report Study and Fraud Risk Checklist Offer Financial Executives
Practical Tools for Year-End Reporting; 2008 Planning
Comprehensive Online Financial Report Database to Supplement Resources
Florham Park, NJ - January 7, 2008 ─ Financial Executives Research Foundation (FERF), the research affiliate of Financial Executives International (FEI), announced today the release of two important new pieces of research designed to aid public company management and corporate boards in the efficient evaluation of their assessment of reporting issues and internal controls.
A new FERF Study, entitled “What’s New in Financial Reporting: Financial Statement Notes from Annual Reports,” examines disclosures from 2006 annual reports for the 100 largest publicly-traded companies that used particularly innovative techniques to clearly address difficult accounting issues. The study identifies and analyzes recent reporting trends and common practices in financial statements.
The report illustrates how companies addressed specific accounting issues recently promulgated by the Financial Accounting Standards Board (FASB) and by the U.S. Securities and Exchange Commission (SEC), and in doing so, uncovered a number of trends, which include:
- Most of the disclosures selected appear to have been developed specifically for a company’s own operations and industry standards, rather than “boilerplate” disclosures.
- Four accounting areas identified with a considerable variation in disclosures. The examples cited in these areas used innovative techniques to clearly address difficult accounting issues.
- Commitments and contingencies
- Derivatives and financial instruments
- Goodwill and intangibles
- Revenue recognition.
o Twenty-five out of 100 filers in the 2006 reporting season reported tangible asset impairments as a critical accounting policy.
o Many companies report condensed consolidating cash flows statements as part of their segment disclosures, although not required by SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information.
To further facilitate use of this report as a reference tool, all of the financial statement footnotes gathered for the study are available to members on the Financial Executives International website at www.financialexecutives.org/eweb//dynamicpage.aspx?site=_fei&webcode=EDG_home.
“FERF undertook this study to provide our members with an illustration of how companies have used innovative techniques to clearly address difficult accounting concerns,” said Cheryl Graziano, vice president, Research and Operations for FERF. “Recent accounting issues publicized by FASB and SEC have had a direct impact on members of the financial community, and the report shows that many companies are taking action. We hope that all financial executives can utilize the report as both a quick update to summarize recent trends in the most recent annual reporting season, as well as a reference to address common accounting issues. The convenience of the online database will provide executives with a readily handy tool when drafting their own annual reports.”
A second piece of research by FEI, entitled the “FERF Fraud Risk Checklist,” provides boards of directors and management with a series of questions to help in assessing the potential risk factors associated with fraudulent financial reporting and the misappropriation of assets. These questions were developed from a number of key sources on financial fraud and offer executives a single framework in which to evaluate their company’s reporting, while providing a sample structure for management to use in documenting its thought process and conclusions.
“Making improvements to compliance with Sarbanes Oxley is a daily practice for financial executives, and the first step in efficient evaluation of internal controls is the proper assessment of potential exposures or risks associated with fraud,” said Michael Cangemi, president and CEO, Financial Executives International. “Through conversations with members of the financial community, we learned that, this type of risk assessment, while a routine skill for auditors, it is a concept that many members of management are not always familiar with. This checklist combines knowledge from the leading resources on fraud to help financial managers take a proactive step in evaluating their company’s practices and identifying areas for improvement.”
The annual report study, including the full report and access to the online database, is free of charge for FEI members. For others, the report and access to the online database available for $129 at
../../eweb/DynamicPage.aspx?site=_fei&webcode=ferf_pub_detail&prd_key=b1ba150e-3ca2-4dc8-9bbd-f5628ce5b506. The fraud checklist is free of charge for FEI members, and for others it is available for $49.95 at ../../eweb/DynamicPage.aspx?site=_fei&webcode=ferf_pub_detail&prd_key=64a0e785-0955-4e11-810f-d45db31b6546. For reprints and content licensing, contact Janet Russell at (973) 765-1032 or jrussell@financialexecutives.org.
About Financial Executives Research Foundation, Inc.
Financial Executives Research Foundation Inc. (FERF) is the non-profit 501(c)3 research affiliate of Financial Executives International (FEI). FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and nonmembers alike, in a variety of publication formats. The Foundation relies primarily on voluntary tax-deductible contributions from corporations and individuals.
About Financial Executives International (FEI)