The economic outlook for 2010 looks and feels stronger for the first time in the last two years.
But we can see challenges for Australian businesses particularly with the lag effect of the downturn and the increase in interest rates.
These challenges come in all shapes and sizes. Insolvent trading for Directors is one.
Recently ASIC produced a draft guide to highlight to Directors (particularly the SME community) their responsibilities relating to insolvent trading. While the aim of the guide is commendable there are improvements that need to be made. Most importantly ASIC needs to explain its communication strategy on this issue as a guide alone will have minimal benefit.
Of greater impact is a discussion paper released by Minister the Hon Chris Bowen on changes to the current insolvency laws. Oddly this paper seems to suggest that ASIC's guide will have a very short shelf-life.
We applaud the Minister for releasing the paper and wishing to engage in this debate. Some options in the paper relate to a more informal approach to business rescue plans, including greater flexibility to directors liabilities.
Laws on insolvency are finely balanced. Adjusting those laws requires a steady hand - but the goal is worth it! Inevitably attention in this debate will come to those individuals who abuse the laws, such as those involved with phoenix activities.
Dishonest behaviour should not prevent law change, particularly if substantial benefit can be gained.
Let's use this paper on insolvency laws to have a healthy debate on one of Australia's most important regulatory settings.
Friday, January 29, 2010
Friday, January 8, 2010
Sustainable reporting
Happy New Year!
Just before Christmas, I attended the Accounting for Sustainability Forum in London, UK. The forum was attended by representatives from global businesses, audit firms and professional bodies, among others. The forum had considerable alignment with the climate change discussions occurring simultaneously among world leaders in Copenhagen.
It was agreed that we would form a committee that would oversee development of a global ‘integrated reporting’ model. The model would connect the reporting of an organisation’s strategy, risk and financial and sustainability performance.
I found the forum to be an extremely valuable experience, particularly given the Institute’s work on Broad Based Business reporting which not only fits with the breadth of thinking that has been happening with the concept of integrated reporting around the world, but has been at the forefront in terms of thinking and content. Overall there was strong conviction by all at the forum that accountants and the profession need to play a leadership role when it comes to global sustainability challenges.
I also left the forum with some trepidation. One of the biggest challenges to the success of integrated reporting is the current level of global dissatisfaction with financial statements – that is, the issues about the size of statements, complexity, too much detail, etc. I was left thinking: if we add to financial statement reporting with broader integrated focus, will all of this useful and relevant information be left by the wayside because of the current concerns with financial statements?
Where do you see the future of reporting heading?
Just before Christmas, I attended the Accounting for Sustainability Forum in London, UK. The forum was attended by representatives from global businesses, audit firms and professional bodies, among others. The forum had considerable alignment with the climate change discussions occurring simultaneously among world leaders in Copenhagen.
It was agreed that we would form a committee that would oversee development of a global ‘integrated reporting’ model. The model would connect the reporting of an organisation’s strategy, risk and financial and sustainability performance.
I found the forum to be an extremely valuable experience, particularly given the Institute’s work on Broad Based Business reporting which not only fits with the breadth of thinking that has been happening with the concept of integrated reporting around the world, but has been at the forefront in terms of thinking and content. Overall there was strong conviction by all at the forum that accountants and the profession need to play a leadership role when it comes to global sustainability challenges.
I also left the forum with some trepidation. One of the biggest challenges to the success of integrated reporting is the current level of global dissatisfaction with financial statements – that is, the issues about the size of statements, complexity, too much detail, etc. I was left thinking: if we add to financial statement reporting with broader integrated focus, will all of this useful and relevant information be left by the wayside because of the current concerns with financial statements?
Where do you see the future of reporting heading?
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