Take a deeper look at the risks of auditing, and everyone will sleep better.
By Bill Hatton
What keeps your company’s auditor awake at night? Like most professionals, it’s most likely uncertainty–nagging concern that there isn’t quite enough evidence to support signing off on the audit.
What keeps company executives up? Probably something similar: The auditor might have missed something important, putting your company at risk of embarrassing re-statements—or worse.
Martin Baumann, chief auditor and director of professional standards, Office of the Chief Auditor, Public Company Accounting Oversight Board (PCAOB), says there are good reasons for everyone’s loss of sleep: Auditors may be too credulous.
“Lack of auditor skepticism is common,” Baumann says. “Due professional care requires professional skepticism; auditors need to find evidence that statements are free from material misstatements.
In the name of transparency, standardized business reporting to get an interactive signature
By James C. Hyatt
There’s an XBRL in your future. That’s shorthand for “eXtensible Business Reporting Language,” an important financial reporting initiative that many large companies have tested, and which the SEC is strongly pushing.
The XBRL idea is a decade old, but it is clearly picking up speed. Its progress prompted Motley Fool commenter Tim Beyers earlier this year to call XBRL “the most important shareholder initiative in a decade.”
The idea is to standardize business-information reporting and make it interactive so that a wide variety of information users—from accountants, software companies and government agencies to investors and researchers as well as companies themselves—can search corporate filings and compare data in creative ways.
A major hurdle, however, has been the creation of “taxonomies” or agreed-upon definitions that will be used in all XBRL reports.
New index tracks alternative energy, water, waste-management businesses
By Dennis Schaal
Institutional and retail investors tracking the performance of the global environmental technologies market can access a new tool to benchmark that sector.
FTSE Group introduced its Environmental Opportunities All-Share Index, which includes 450 companies involved in alternative energy, water and waste-management businesses.
To get into the index, the companies must be part of the FTSE Global Equity Index Series and garner at least 20 percent of their revenue from environmental markets or technologies.
The FTSE Environmental Opportunities All-Share Index is available through data distributors including, Bloomberg.
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