Aantekeningen / Notes
-
Corporate Reporting
(EBM219A05)
Lecturers: Semester 2B year 2022/2023
- Dr. Teye A. Marra
- MSc Adrianca C.M. Mens RA
- Dr. Jacob T. Reilley
- Prof. Dr. Dick A. de Waard
Index
Lecture 1 – Governance and compliance reporting ................................................................................ 2
General introductions of the course ................................................................................................... 2
(I) Shifts in regulatory strategies (leading to today’s reporting environment) ............................... 4
(II) How practices of auditing have changed (since the turn of the century) ............................... 6
(III) Changing roles of auditors and accountants (in today’s corporate reporting environment) . 7
Lecture 2 – challenges to compliance ..................................................................................................... 9
Lecture 3 – Non-financial Reporting: Introduction, definitions and relevance..................................... 14
Theory................................................................................................................................................ 14
Introduction and definitions ............................................................................................................. 14
History ............................................................................................................................................... 15
Relevance .......................................................................................................................................... 16
Lecture 4 – Non Financial Reporting Frameworks; Stakeholders and Materiality; Transparency
Benchmark............................................................................................................................................. 18
Non Financial Reporting Frameworks ............................................................................................... 18
Stakeholders and materiality ............................................................................................................ 22
Lecture 5 – integrated reporting; Core and More; EU Green Deal (NFRD, TCFD, EU Taxonomy, CSRD);
Actual developments............................................................................................................................. 24
Theory................................................................................................................................................ 24
Form of the integrated report ........................................................................................................... 24
Core and More reporting .................................................................................................................. 26
EU Green Deal & Sustainable Finance Action Plan............................................................................ 26
Lecture 6 - .............................................................................................................................................. 29
1
,Lecture 1 – Governance and compliance reporting
General introductions of the course
Agenda for the course
- We will discuss the different forms of external reporting – not just financial statements, but
also sustainability reports, fiscal accounts, corporate governance reports, and social reports
- The course addresses questions like:
o Why do corporations publicly disclose information
o What kind of information is disclosed?
o How do corporations conduct different forms of mandatory and voluntary
disclosure?
- Mix of theoretical constructs and empirical analyses
Course goal
- Increase your knowledge of corporate reporting standards and practices, and to enhance
your understanding of and appreciation for the connections between research and practice
in this field
- Discuss 3 main themes (see next slide) form the following perspectives:
o (i) history, (ii) institutional setting (including standards), (iii) international issues, (iv)
contemporary research, (v) practical issues
Course structure
Three main themes
- Part I: Governance and compliance reporting (2 lectures)
- Part II: Non-financial information reporting (3 lectures)
- Part III: Financial reporting (2 lectures)
Each lecture is accompanied by mandatory and recommended literature (see course manual for
details)
Assessment
- The final grade is calculated as the sum of the grade of the final exam (50%), and the 2 group
assignments (50%)
- In case the average grad of the group assignment is lower than 5.5, a reparation opportunity
will be provided (max. grad for resit is 5.5)
- Part of the assessment is a student assessment of the contribution of each group member to
the group assignments (peer review)
- The final exam consists of open questions and lasts for two hours
2
,Learning objectives for today
At the end of the lecture, you will be able to describe
(I) Shifts in regulatory strategies that have led to the modern reporting environment
(II) How practices of auditing have changed over the past 20 years
(III) How the roles auditors and accountants changed in corporate reporting
Literature for today
Primary:
- Power, M. (2007). Turning Organizations Inside Out: The Rise of Internal Control. In
Organized Uncertainty: Designing a World of Risk Management (pp. 34-65). Oxford University
Press.
Optional/recommended:
- Stolowy, H., & Paugam, L. (2018). The expansion of non-financial reporting: an exploratory
study. Accounting and Business Research, 48(5), 525-548.
https://doi.org/10.1080/00014788.2018.1470141
- Zou, S., R. Simnett, and H. Hoang, 2019, Evaluating Combined Assurance as a New Credibility
Enhancement Technique, AUDITING: A JOURNAL OF PRACTICE & THEORY, Vol. 38, No. 2, pp.
235-259. https://doi.org/10.2308/ajpt-52175
Background: corporate reporting environment
- Reporting is a result of its environment
o But it shapes the environment too
o It is not objective or neutral
o Balance sheet equilibrium, e.g., is an accounting construction
o Result of subjective choices (e.g., earnings management)
- Reporting has changed considerably over the past several decades
Evolution of corporate reporting
Reasons for change in reporting practices
- Recent accounting crises
o Rules vs. principle based, increased focus on corporate governance
- People, planet and profit
o Planet and people have gained importance relative to profit
- New Economy firms do not fit the traditional accounting system
o ICT and the valuation of intangible assets (e.g., software)
- Regulatory reforms
o New regulatory strategies and capacities
3
, (I) Shifts in regulatory strategies (leading to today’s reporting environment)
Changes in regulatory strategies
- Approaches to regulation and internal control have undergone profound transformations in
recent decades!!!
- Driven by scandals, corporate failures, changes in regulatory philosophy
- One specific aspect of these changes: corporate governance
- Defined by and reinforce through auditable internal controls
Corporate governance
- Since the start of the 1990s corporate governance has enjoyed wide dissemination
- Various scandals have been used as reason for more regulation/oversight
- UK 1992: Cadbury Code
- Influenced other policies: Sarbanes-Oxley Act (U.S.), KonTraG (Germany), Dutch Corporate
Governance Code (Netherlands)
- Today: corporate governance central part of all organizations
- Corporate governance has been hugely influential for corporations regulators
- Regulations follow the style of corporate governance
- Different theories of corporate governance:
o Shareholder value: principal – agent situation
o Stakeholder approach: stakeholder management
o Stewardship theory: the good shepherd
EXAM: what is the managerial turn
- Signals a “managerial turn” in regulation
- Corporate governance inspired national regulators to focus more on managerial
requirements in their standards/regulations.
- Corporate governance focuses on the control and monitoring structures of the firm, and
consequentially,
- Regulators began to focus more of their attention on management processes and systems
(e.g., as indicated in corporate governance codexes).
Command & Control v. self-regulation
- Traditional approach: bureaucracy and command & control
- Bureaucracies always faced issues with pragmatically adjusting to local necessities (also very
expensive)
- Regulation was modernized as enforced self-regulation, or “responsive regulation” (Ayres &
Braithwaite, 1992) EXAM
- Core idea: organizations are mandated to manage themselves
4
-
Corporate Reporting
(EBM219A05)
Lecturers: Semester 2B year 2022/2023
- Dr. Teye A. Marra
- MSc Adrianca C.M. Mens RA
- Dr. Jacob T. Reilley
- Prof. Dr. Dick A. de Waard
Index
Lecture 1 – Governance and compliance reporting ................................................................................ 2
General introductions of the course ................................................................................................... 2
(I) Shifts in regulatory strategies (leading to today’s reporting environment) ............................... 4
(II) How practices of auditing have changed (since the turn of the century) ............................... 6
(III) Changing roles of auditors and accountants (in today’s corporate reporting environment) . 7
Lecture 2 – challenges to compliance ..................................................................................................... 9
Lecture 3 – Non-financial Reporting: Introduction, definitions and relevance..................................... 14
Theory................................................................................................................................................ 14
Introduction and definitions ............................................................................................................. 14
History ............................................................................................................................................... 15
Relevance .......................................................................................................................................... 16
Lecture 4 – Non Financial Reporting Frameworks; Stakeholders and Materiality; Transparency
Benchmark............................................................................................................................................. 18
Non Financial Reporting Frameworks ............................................................................................... 18
Stakeholders and materiality ............................................................................................................ 22
Lecture 5 – integrated reporting; Core and More; EU Green Deal (NFRD, TCFD, EU Taxonomy, CSRD);
Actual developments............................................................................................................................. 24
Theory................................................................................................................................................ 24
Form of the integrated report ........................................................................................................... 24
Core and More reporting .................................................................................................................. 26
EU Green Deal & Sustainable Finance Action Plan............................................................................ 26
Lecture 6 - .............................................................................................................................................. 29
1
,Lecture 1 – Governance and compliance reporting
General introductions of the course
Agenda for the course
- We will discuss the different forms of external reporting – not just financial statements, but
also sustainability reports, fiscal accounts, corporate governance reports, and social reports
- The course addresses questions like:
o Why do corporations publicly disclose information
o What kind of information is disclosed?
o How do corporations conduct different forms of mandatory and voluntary
disclosure?
- Mix of theoretical constructs and empirical analyses
Course goal
- Increase your knowledge of corporate reporting standards and practices, and to enhance
your understanding of and appreciation for the connections between research and practice
in this field
- Discuss 3 main themes (see next slide) form the following perspectives:
o (i) history, (ii) institutional setting (including standards), (iii) international issues, (iv)
contemporary research, (v) practical issues
Course structure
Three main themes
- Part I: Governance and compliance reporting (2 lectures)
- Part II: Non-financial information reporting (3 lectures)
- Part III: Financial reporting (2 lectures)
Each lecture is accompanied by mandatory and recommended literature (see course manual for
details)
Assessment
- The final grade is calculated as the sum of the grade of the final exam (50%), and the 2 group
assignments (50%)
- In case the average grad of the group assignment is lower than 5.5, a reparation opportunity
will be provided (max. grad for resit is 5.5)
- Part of the assessment is a student assessment of the contribution of each group member to
the group assignments (peer review)
- The final exam consists of open questions and lasts for two hours
2
,Learning objectives for today
At the end of the lecture, you will be able to describe
(I) Shifts in regulatory strategies that have led to the modern reporting environment
(II) How practices of auditing have changed over the past 20 years
(III) How the roles auditors and accountants changed in corporate reporting
Literature for today
Primary:
- Power, M. (2007). Turning Organizations Inside Out: The Rise of Internal Control. In
Organized Uncertainty: Designing a World of Risk Management (pp. 34-65). Oxford University
Press.
Optional/recommended:
- Stolowy, H., & Paugam, L. (2018). The expansion of non-financial reporting: an exploratory
study. Accounting and Business Research, 48(5), 525-548.
https://doi.org/10.1080/00014788.2018.1470141
- Zou, S., R. Simnett, and H. Hoang, 2019, Evaluating Combined Assurance as a New Credibility
Enhancement Technique, AUDITING: A JOURNAL OF PRACTICE & THEORY, Vol. 38, No. 2, pp.
235-259. https://doi.org/10.2308/ajpt-52175
Background: corporate reporting environment
- Reporting is a result of its environment
o But it shapes the environment too
o It is not objective or neutral
o Balance sheet equilibrium, e.g., is an accounting construction
o Result of subjective choices (e.g., earnings management)
- Reporting has changed considerably over the past several decades
Evolution of corporate reporting
Reasons for change in reporting practices
- Recent accounting crises
o Rules vs. principle based, increased focus on corporate governance
- People, planet and profit
o Planet and people have gained importance relative to profit
- New Economy firms do not fit the traditional accounting system
o ICT and the valuation of intangible assets (e.g., software)
- Regulatory reforms
o New regulatory strategies and capacities
3
, (I) Shifts in regulatory strategies (leading to today’s reporting environment)
Changes in regulatory strategies
- Approaches to regulation and internal control have undergone profound transformations in
recent decades!!!
- Driven by scandals, corporate failures, changes in regulatory philosophy
- One specific aspect of these changes: corporate governance
- Defined by and reinforce through auditable internal controls
Corporate governance
- Since the start of the 1990s corporate governance has enjoyed wide dissemination
- Various scandals have been used as reason for more regulation/oversight
- UK 1992: Cadbury Code
- Influenced other policies: Sarbanes-Oxley Act (U.S.), KonTraG (Germany), Dutch Corporate
Governance Code (Netherlands)
- Today: corporate governance central part of all organizations
- Corporate governance has been hugely influential for corporations regulators
- Regulations follow the style of corporate governance
- Different theories of corporate governance:
o Shareholder value: principal – agent situation
o Stakeholder approach: stakeholder management
o Stewardship theory: the good shepherd
EXAM: what is the managerial turn
- Signals a “managerial turn” in regulation
- Corporate governance inspired national regulators to focus more on managerial
requirements in their standards/regulations.
- Corporate governance focuses on the control and monitoring structures of the firm, and
consequentially,
- Regulators began to focus more of their attention on management processes and systems
(e.g., as indicated in corporate governance codexes).
Command & Control v. self-regulation
- Traditional approach: bureaucracy and command & control
- Bureaucracies always faced issues with pragmatically adjusting to local necessities (also very
expensive)
- Regulation was modernized as enforced self-regulation, or “responsive regulation” (Ayres &
Braithwaite, 1992) EXAM
- Core idea: organizations are mandated to manage themselves
4
