Last quarter’s positive sentiment largely continued this quarter. Although own-company optimism and expectations for the European and Chinese economies faltered a bit, expectations for revenue, earnings, and hiring all rose again (capital spending declined somewhat, but remains relatively high). In addition, CFOs’ confidence in US equity markets appears to have strengthened, with a comparatively low 63% regarding markets as overvalued (well below the above-80% levels from late last year).

Still, CFOs continue to express concerns about the future – especially around trade policy and geopolitics. As these concerns have risen, worries about global economic growth, which appeared to be declining for the past year, began to rise again. Moreover, although CFOs remain quite optimistic about their companies’ prospects, they voice continuing concerns about securing key talent and executing their strategies, and newly escalating concerns about avoiding complacency and improving organizational focus.

This quarter, we also asked finance chiefs about their scope of responsibility, the roles they brought to their current position, and the experiences most important for their successors. The findings show that CFOs appear to be taking on broader formal responsibility for business planning, IT/data, operations, and risk. It also appears that CFOs’ backgrounds are changing, with FP&A, controller, and other CFO positions the most common prior roles, but with younger CFOs comparatively more likely to cite investor relations and strategy roles. Accordingly, CFOs were likely to recommend that their successors have backgrounds in corporate strategy, in their industry, and in investor relations.

Review the publication on our US firm's website.

The purpose of these examples is to il­lus­trate the use of the IFRS Taxonomy 2018 elements by tagging the illustrative examples that accompany IFRS Standards.

Review the press release and the illustrative examples on the International Accounting Standards Board's website.

The Lab considered how current developments and use-cases of blockchain technology might impact corporate reporting processes in the future. In the report, the Lab use their digital reporting framework to explore how different technologies might impact the production, distribution and consumption of corporate reporting.

The report recommends actions for various groups who have an interest in this area including:

• Regulators, standard-setters and professional bodies are encouraged to monitor blockchain developments and consider how they may impact corporate reporting.  The report recommends the creation of a forum where all those involved in corporate reporting can share and learn.
• Preparers and users should focus on gaining a greater level of understanding and consider experimentation and cautious innovation when costs and benefits are balanced.

Review the report on the FRC's website.

The three communities share a basic set of design principles and technological foundations, but the people, goals, and prospects are almost completely distinct. Those involved don’t help much by sniping constantly about which is the “real” movement.

Review the full opinion piece on Wharton School's website.

Comments on the proposed taxonomy improvements related to nonemployee share-based accounting are due by July 20, 2018.

Comments on the proposed taxonomy improvements related to contributions received and contributions made are due by July 21, 2018.

Specifically, the proposed amendments would:

• Increase the maximum tenure of the Trustee Chair and Vice-Chair to nine years.
• Allow the option to appoint a Chair from either internally within the Trustees or externally.
• Clarify the requirements for Trustee reappointments.

Review the press release on the International Accounting Standards Board’s website.

In his speech, Mr. Clayton covered the following topics:

• Culture is not an option
• Know your culture
• Culture is a collection of countless internal and external actions
• Preserving and enhancing culture through a clear and constant mission
• Culture beyond the law and regulation
• We do not expect perfection; we do expect commitment and action

Review the full speech on the SEC's website.

The AcSB wants to discuss and improve financial and non-financial performance measures reported outside of financial statements.

In introducing the framework, the AcSB notes concerns that are often mentioned in connection with performance measures:

• the quality of performance measures being reported;
• the lack of consistency, transparency and comparability of performance measures reported period to period;
• the “expectation gap” about the governance practices of entities over how performance are developed and reported, and whether those measures are subject to assurance, and
• the limited guidance available on how to develop and report performance measures not usually subject to assurance.

Consequently, the framework is intended to be a tool to guide:

• management in developing and assessing how effectively they report financial and non-financial performance measures;
• directors and others charged with governance in fulfilling their responsibilities when assessing management’s processes and reporting of performance measures; and
• investors, contributors, lenders and other resource providers in setting expectations and seeking compliance with the framework as part of obtaining the information they need.

This Framework applies to a performance measure that is reported separately from and is not part of a set of financial statements (including note disclosures) prepared in accordance with an accounting framework, such as Canadian GAAP, IFRS® Standards or US GAAP; and is:

• a non-GAAP financial measure that is an adjustment to a GAAP financial measure*, such as funds from operations and adjusted earnings;
• another financial measure that is a financial measure and is not a GAAP or non-GAAP financial measure, such as dollars of order backlog and cost per dollar raised; or
• a non-financial measure or operational measure that reports physical or non-financial data, such as number of volunteers, employees, members, active users or new stores, and performance ratings on client service, safety and reliability.

Review the press release and Draft Framework on the AcSB's website.

In his speech, Mr. Hinman states that:

Review the full speech on the SEC's website.

The keynote address was delivered by Prof Andreas Barckow, President of the German standard-setter Accounting Standards Committee of Germany and Vice-President of the European Financial Reporting Advisory Group (EFRAG). In his presentation, he took stock of the current situation in financial reporting, other (wider) corporate reporting, and technological aspects (proliferation/dissemination).

His thought-provoking points included the statements that in financial reporting there have been no major developments in Europe since 2005, that the current approach seemed to continue to try to apply a "manufacturing-centric" accounting model to an increasingly service-oriented industry (which might indeed be fostering the use of non-GAAP measures), and that the difficulty of addressing a problem should never be an excuse for not addressing it (this was said in the context of intangibles). Prof Barckow also pointed out that while there is one international accounting standard-setter (the IASB), there are up to 1,000 organisations active in the field of wider corporate reporting. On technology, he stated that the current thinking is still focused on printed reports, which means to ignore the vast posiibilities technological developments offer that could see for example ideas such as the CORE & MORE approach to corporate reporting realised.

The panel discussion following the keynote address was moderated by Prof Katherine Schipper of Duke University and saw as panelists Prof Axel Haller, University of Regensburg, Prof Paul André, HEC Lausanne, and Prof Barckow. They picked up several aspects mentioned in the keynote address:

• No major developments in financial reporting since 2005. While the point was at first contested in extreme form, the panelists by and by concluded that there was some validity to it. It was even stated that IFRS 9, IFRS 15, and IFRS 16 replaced standards that many in practice saw as working well, i.e. that were not broken. The new standards often also build on ideas that had been around for a long time - in some cases since the 1990s. While moving from incurred losses to expected losses with IFRS 9 was indeed a conceptual change, however, it was stated that in practice even under IAS 39 preparers were already half way to expected loss accounting. In the end, the moderator even questioned whether 2005 was a reporting development or merely a convergence development.
• Non-GAAP measures. After quickly clarifying what had been meant by the non-GAAP measure problem in the keynote address, panelists discussed whether non-GAAP measures were a problem at all. They concluded that not the non-GAAP measures were a problem in themselves ("non-GAAP measures come and go") but the lack of reconciliation or indeed lack of reconcilability was. Nevertheless, panelists refused to place the fault entirely with the preparers. Comments included that the increased use of non-GAAP measures expressed a management approach and showed that "the true North" was not always where the standard-setters believed it to be. It was also stated that the use of these measures showed that we are on a way away from standardised accounting. It was in this context that the IASB's work on management performance measures was brought up and questioned as it would indeed cling to a broader boundary question that tries to define what gets in and what must be left out. It was noted that trust was about systems and processes, not about printed reports, and that the non-GAAP measure problem could be addressed by moving away from the paper approach.
• Intangibles. Intangibles were described not only as a concern but as a growing concern as the economy is more and more service-oriented and there are many intangible assets that never show up on a balance sheet although the market clearly sees them. After an intervention from the audience that noted that the logic should not be that the markets see something and then the accounting needs to explain it, the panelists agreed that the problem was not so much in not recognising intangible assets but rather in the question why there was often such a gap between an entity's market capitalisation and the profit (or lack of profitability) shown in the financial statements.There was not necessarily a need to align the two numbers but there should be a way to reconcile them. The new definition of an asset in the revised Conceptual Framework was mentioned and questioned, especially in the context of research and development costs.
• Sustainability. Panelists were asked which way forward they saw for wider corporate reporting or rather linking sustainability and other wider corporate reporting aspects with financial reporting. The wish was expressed that the many organisations on the sustainability side would combine under the umbrella of (ideally) one, and the clear favourite was the Global Reporting Initiative (GRI). The IASB could then work together with that one organisation and concentrate on areas where the requirements overlap to harmonise them so that for example not several concepts of materiality clash. Again the CORE & MORE concept was brought up where not only the sustainability organisations would combine but also the IASB and the remaining organisation would be brought together under one even larger umbrella that would also include other corporate reporting organisations.
• Academic contribution to standard-setting. The standard-setter on the panel was asked what he thought researchers could contribute to standard-setting. He replied that he saw two ways he would want research to support standard-setting: (a) by confirming (or refuting) that certain problems (such as mentioned in the keynote address) existed and (b) if indeed the existence of a problem was confirmed to then offer thoughts and solutions. He clearly advocated normative research in this case and expressed disappointment that at least as far as he was aware no research had been contributed to the revision of the Conceptual Framework of the IASB, which would have been a prime opportunity for normative research. His fellow panelists agreed and concluded that research should lead standard-setting and not just try to follow it.

The following additional information is available on the website of the Bucharest University of Economic Studies:

• Slides for the keynote address
• Information on the full programme of the AMIS 2018