Auditors, accountants and businesses need to agree on expectations and deliverables in audits.
By Alan Anderson
Transforming Audit for the Future
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“The New Manifesto for Accountants.“
Do the banks and investors get useful information from historical audited financials? In their book, “The End of Accounting and the Path Forward for Investors and Managers,” Baruch Lev and Feng Gu researched the relationship between changes in stock prices and the dates that corporate financial reports were released.
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In the 1950s and 1960s, roughly 90 percent of the market value of public companies could be directly attributed to the earnings and book value reported in their financials. By 2013, that percentage had dropped to just 50 percent. Personally, I’m surprised it’s even that high. The historical financial statement does not serve the needs of the users of those statements.
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