COSO - شبكة المحاسبين العرب

الخميس, 22 سبتمبر 2022 08:35

تركيز المدققين على المخاطر البيئية والاجتماعية وحوكمة الشركات

يركز المدققون أكثر على المخاطر البيئية والاجتماعية وحوكمة الشركات

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المحتوى بالإنجليزية Auditors focusing more on ESG risks

As companies come under increasing pressure to deal with climate change and diversity, their internal auditors are putting more emphasis on making sure environmental, social and governance reports are reliable.

A new report released Wednesday by the Institute of Internal Auditors explains some of the challenges involved with providing assurance on ESG and sustainability reports and understanding the risks of climate change and lack of diversity for a company’s operations.

More organizations are facing pressure from environmental groups, activist shareholders and asset managers to make public commitments to sustainability and provide regular updates on their ESG strategies, goals and measurements, while making sure they’re accurate and relevant. However, the report points out that ESG reporting is still at an immature stage, and there’s no single authoritative set of standards for what should be reported, although a number of groups have been moving in recent months to align their standards and frameworks. The internal audit function can help management by providing assurance, insights and advice on ESG matters, as some outside auditing firms like the Big Four have also begun to do.

IIA president and CEO Anthony J. Pugliese (left) signs memorandum of understanding with IIA director of strategic global initiatives Greg van Choyke.Courtesy of IIA
The IIA is looking at ESG through the filter of its Three Lines of Defense model. “It’s the role of governance at the board, and then the role of management to make sure these things are being prioritized in terms of these models and frameworks, and then internal audit is in a very valuable position,” said IIA president and CEO Anthony Pugliese. “It’s probably one of the few enterprise functions that can actually look at how risks are identified, how the controls are put into place whether you’re using something like a COSO model, and then reporting back, whether it’s in a consultative or an assurance way to governance and management as to the effectiveness of all of it.”
Some internal audit departments are helping corporate management determine which ESG risks should be a particular focus, and that will often vary by industry. “Management takes responsibility for that, but we’re seeing a lot of activity on that front across the board,” said Pugliese.

ESG standard-setters have been coming under pressure from financial regulators to harmonize their standards and frameworks so investors can rely more on the reports. The Sustainability Accounting Standards Board and the International Integrated Reporting Council have announced plans to merge together later this year to form a group called the Value Reporting Foundation. They have begun working with the Global Reporting Initiative, the Climate Disclosure Standards Board and the Carbon Disclosure Project to align their standards. Meanwhile, the International Financial Reporting Standards Foundation is also preparing to set up a proposed International Sustainability Standards Board that it would oversee alongside the International Accounting Standards Board, with input from the existing ESG standard-setters, and it’s in the process of looking for a chair and vice-chair to run the board (see story).

“The real question right now is which one do we use and how do we do it?” said Pugliese. “It’s almost entirely nonfinancial. There are a lot of questions on how to do it, and there’s further consolidation taking place in a space where standards are being set on these topics, and identifying which ones are important.”

The IIA is a member of the IIRC and recently wrote a letter to the Securities and Exchange Commission, which has been asking for comments about ESG disclosures. In its letter, the IIA called for uniform climate disclosure by corporations and recognition of the role played by internal auditors in providing assurance around accurate, reliable information.

Increasingly, in response to the Black Lives Matter protests last year, companies are focusing more on diversity, which fits into the social part of ESG reporting. ESG standard-setters generally haven’t developed standards for that as much as their environmental standards, perhaps out of fear of being accused of setting up racial quotas.

“There are some concepts that have not yet found their way into standards yet, like diversity, equity and inclusion,” said Pugliese. “How do you measure that? It’s such a subjective term. Companies are looking for ways to report on it. You’ve got big investment management firms like BlackRock who are talking about it a lot, and companies are struggling with what they need to produce and monitor. You certainly don’t want DE&I to be a kind of checklist for saying, ‘Yeah, we’ve hired all the right people,’ and this is a thing that’s done. It’s a lot more detailed than that and subjective. They’re turning to internal audit to assist in that. We’re seeing things like culture audits beginning to happen to make sure things like DE&I are firmly embedded in culture so companies can report on that. It’s becoming a more prevalent topic, and that’s just one part of the overall ESG spectrum.”

The IIA plans to continue working on ESG issues with the IIRC as well as the International Federation of Accountants and other global groups that have long been involved with ESG reporting, whose urgency has been given greater impetus by climate change, racial protests and the pandemic.

“It’s not like the Wild, Wild West,” said Pugliese. “It’s been around for a while around the world. But these things get triggered by something like what happened last year, and all of a sudden they’re just being propelled forward at lightspeed. We want to make sure there are no adverse effects so companies can be ready to do this work. We’re keeping an eye on it for sure and want to be part of these new groups and the calls for members to be in these groups.”

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الثلاثاء, 24 أغسطس 2021 14:40

ماكنالي الرئيس الجديد لمعهد المحاسبين الإداريين

عين معهد المحاسبين الإداريين رسمياً ج. ستيفن ماكنالي كرئيس لمجلس إدارة IMA العالمي، وهو يخطط للتركيز على الحضور المتزايد للمؤسسة على المستوى الدولي.

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المحتوى بالإنجليزية New IMA chair McNally embraces global focus
By Michael Cohn
July 16, 2021, 4:24 p.m. EDT
7 Min Read
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The Institute of Management Accountants officially appointed J. Stephen McNally as chair of the IMA’s global board of directors, and he plans to focus on the organization’s growing presence internationally.

McNally, who is CFO of the Plastic Technologies group of companies and previously spent a long career as a finance executive at Campbell Soup, will chair the IMA global board for fiscal year 2022, from July 1, 2021, to June 30, 2022. He will be succeeded by Gwen van Berne of the internet registry RIPE NCC in the Netherlands (see story).

The IMA, like other accounting organizations such as the AICPA, have been putting more emphasis on broadening their international presence. McNally also hopes to advance the IMA’s thought leadership and research, especially around the future of work, and to advance the use of technology strategies in the accounting and finance profession and support members in being effective, well-rounded management accountants and finance professionals. He also plans to help members in the small business sector recover from the impact of the COVID-19 pandemic.

McNally also will be chairing the IMA's Governance Standing Board Committee and be a member of the Nominating Standing Board Committee. He is a member of the IMA's Toledo Chapter and a former board liaison to the IMA Committee on Ethics.

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“I’m really excited and honored to be in the role as chair for IMA,” he told Accounting Today. “Clearly, we’re in a very dynamic environment and it’s just going to continue to ramp up and change, so one of my key priorities or goals is to support our members in becoming future ready, not knowing what that future looks like, but being future ready to do their work. That’s through things like keeping the CMA up to date, and doing various webinars and articles, all around just helping our members prepare for the future of work.”

J. Stephen McNally
McNally also plans to contribute to the IMA’s thought leadership work, especially around the use of internal controls over financial reporting, using the COSO framework, originated by the Committee of Sponsoring Organizations of the Treadway Commission.

“One of the things I’ve always been impressed with is how IMA is such a leader within the management accounting and finance profession on various topics,” he said”. I’m personally partial to COSO and internal controls and enterprise risk management. I had the honor of representing IMA on the COSO Advisory Council back in 2011-2012 that updated the internal control framework. IMA also drives thought leadership in the areas of sustainability and DE&I and ethics and so many areas.”

A big priority as global chair will be the IMA’s work internationally. “Over the last 10 to 12 years, we’ve very much evolved from a very U.S.-centric organization to a global organization, with over 140,000 members in over 150 countries,” said McNally. “Therefore, for me, it’s imperative that we reach out and listen to the voice of our global members, understand what they need, what their wants and desires are, and how IMA can support them.”

He also wants to do more to support small and midsized businesses. “I spent a good chunk of my career at Campbell Soup, which is obviously a big public company, but now I’m CFO of a small private company, and it was just an eye owner for me how it’s so important that smaller and midsized businesses have the financial talent to be successful. Therefore, it’s so important that we, IMA, support our members in smaller and midsized businesses so they can support their organizations.”

One way the IMA will be supporting businesses is by helping them get through the pandemic as the organization makes plans to once again hold in-person meetings and conferences. “On the one hand, I absolutely am hoping that through vaccinations and through the virus itself becoming more and more under control, hopefully we do have an opportunity to go back to meeting in person and having those live events,” said McNally. “For finance and accounting professionals, it’s important that we play a key role within our organizations and think through helping our organizations be ready for the future, whether that future is tomorrow, or a month out, or six months out. Even things like how do you go back — being completely remote, or is it a hybrid, or is it fully in person? As accounting and finance professionals, we’re inquisitive. We ask questions. That’s one of the key things we need to do within our cross-functional leadership team is ask those questions, to pressure test the decisions to ensure we’re making the best decisions as a company or as an organization.”

The IMA has also been collaborating with the California Society of CPAs on research examining diversity, equity and inclusion in the accounting profession (see story), and that fits in with the group’s international growth.

“I’m very proud of the fact that in the last 10 years alone IMA has gone from being very much U.S.-centric to a global organization, and is now represented in over 150 countries,” said McNally. “Along with that comes the importance of really ensuring that as an organization we hear the voice of our global members. This year, I’m really excited that on July 1, the same day that I became global chair, we’ve actually launched a brand-new, board-level standing advisory committee. It’s our Global Markets Committee. And at the same time, we’ve now launched regional advisory committees in China, India and the Middle East. This is one way that we’re going to ensure that we better hear the voices of our diverse members. And I’m also proud for the first time ever, my successor, Gwen van Berne, will be the first non-U.S. chair of the IMA, so from a governance perspective, we’re pushing very hard to ensure we’re really embracing all kinds of diversity, and giving appropriate representation, whether it’s on our global board or our global technical advisory committees. But also, IMA has played a key role in terms of educating the broader profession and community in regards to setting the tone when it comes to ensuring diversity and equity in our profession and, through that awareness, working toward improving that fact.”

The IMA has also been encouraging accountants to develop technology skills in areas like data analytics as part of its Management Accounting Competency Framework, and McNally hopes to continue that work.

“As CFOs and just generally as accounting and finance professionals, I think we need to take a leadership role,” he said. “Clearly technology plays such an important role in preparing for the future, preparing our respective organizations to be successful. It starts with individuals cultivating a technology savvy mindset, and as individuals, doing what we can. I know I read up on things like RPA and blockchain and data visualization, just staying connected with what the technology trends are, and again as management accountants and finance leaders setting the tone within our own organizations, and evaluating where we are today. What systems do we have? What processes do we have? Where can we be better, more efficient, more effective? How can technology help with that? With that said, typically small and midsized businesses don’t have excess funds to invest, so it’s also very important that we think through the return on investment. What is the technology investment otherwise? That’s another place where the accounting and finance professionals can really make a difference within their cross-functional leadership team in ensuring that we’re asking the right questions, and pressure testing so that we invest in the right technologies for us at this moment in time.”

Accountants need to monitor their organizations’ technology investments and make sure the money doesn’t get wasted. “Over my career, I saw too many times where investments were made in technology and you get yourself to that finish line of going live, and then the management team or the project team moves on, and you take away the budgets for training and such,” said McNally. “You can’t do that. If you’re going to make an investment in technology, it’s really important that you sustain it through the training, through the upgrades and such. That’s where we as management, finance and accounting professionals can make such a difference, especially because we’re the ones typically managing the budgets and have oversight of the budget and can ensure those investments are made for the long term.”