Positive assurance - reading between the lines

The excitement of the G20 meeting in London seems a long way off and the world has reverted to a diet of positive and upbeat political messaging as we await the green shoots of recovery. So as I read the papers recently on the way into work I wasn't surprised to see the contrast between the upbeat comments from the US administration - "the glimmers of hope" and "the free fall is coming to an end" and the reality check - worse than expected decline in March US retail sales (down 1.1%) and a further fall in producer prices (1.2%).

The point at which the political rhetoric and economic reality will align is hard to predict, but I sense, as do others, that this might not be for some time. The only certainty is that the government bill which has been racked up will have to be met by a combination of tax increases and reductions in public sector expenditure. Clearly getting the growth engine running again is critical, but applying 1930's solutions to a 2009 problem may not be the answer. 

It's always interesting and arguably easy to speculate what you might do if you were in charge.  Politicians may not be gamblers, but if I were in their shoes today I'd be contemplating some further radical action, particularly around the creation of low carbon economies. This focus could not only capture the mood of the day but create a convergence agenda around the two biggest challenges we face: rebuilding the financial and economic system and addressing climate change. But to do this needs real leadership, bold steps and most critically, joined up policy initiatives. In the UK, the first indications of where the UK government are on this agenda should appear next week when the Chancellor presents his annual budget. Let's wait and see what he has in store, but above all let's hope there are signs of a clear policy and regulatory framework being put in place that creates some certainty on which the private sector can act.

While we're on the subject of joined up thinking, I was also encouraged last week by some analysis contained in an excellent publication produced by CorporateRegister.com entitled "Assure View". The publication provides an extensive overview of the state of CSR reporting and assurance. For those of us committed to the concept of integrated reporting (the hard wiring of sustainability reporting into mainstream reporting) it was interesting to see the analysis on page 37 highlighting the increasing number of companies moving in this direction. Put another way, more companies recognising that the sustainability agenda is strategic and demands being moved from a silo into the mainstream of the organisation.  

For the auditors among you and those who are interested in ensuring the profession remains relevant and valued, I would also point you to a fascinating analysis of the state of CSR assurance on page 24. It highlights who is providing assurance and what type of assurance one can expect to receive. At a high level the key finding is that boutiques and certified bodies are providing positive assurance in about 75% - 90% of their opinions, while the big professional firms provide positive assurance in less than 20% of their opinions. This split says something about the maturity of CR assurance, but perhaps it also says something about where the world of financial assurance has gone. Someone in a meeting I recently attended, put it very succinctly, "those of us operating in the CR assurance space have to exercise real professional judgement, particularly in assessing what is not reported as much as what is". Perhaps as thinking in this space develops, the accounting profession would be well served to take a step back and reflect on the current health of financial auditing.

As always I am pleased to hear your views and comments on the postings, and to take questions about corporate reporting.

David

Comments

[NALAN ALTINTAS]

Dear David Philips,

I would like to thank you for your article named "Positive assurance - reading between the lines".

I am a research assistant and a Ph.D student from Turkey, my topic is "assurance services". Your article is very useful for me. Thank you again for your contribution.

Regards,
Nalan Altintas
Istanbul University
Faculty of Business Administration
Istanbul-Turkey