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Impact: Improved awareness and development of professional practice related to the financial accounting of carbon, including: its addition to the Climate Disclosure Standards Board (CDSB) work programme and its designation by the International Accounting Standards Board (IASB) as a priority research project (both during 2012).
Significance and reach: The CDSB is a consortium of eight business/environmental organisations (including the World Economic Forum and the World Resources Institute). The IASB is the independent standard-setting body of the International Financial Reporting Standards Foundation.
Underpinned by: Research into corporate carbon accounting practices, undertaken at the University of Edinburgh (2008 onwards).
In the wake of the Enron Scandal in 2002, the global landscape of auditing practices radically changed, significantly transforming the UK regulatory system. University of Glasgow research into the high-level financial reporting interactions between UK companies and external auditors has influenced public debate in the House of Lords and prompted several recommendations of the Select Committee on Economic Affairs. It has also contributed to an ongoing Competition Commission investigation into the market concentration of audit companies, and shaped the working practices at Deloitte, one of the Big Four international audit firms, influencing the industry at a global level.
The perceptions of key user and auditor constituencies on contemporary issues in audit and assurance may differ radically. The research carried out in this critically important area impacted directly on proposals put forward by the Institute of Chartered Accountants of Scotland (ICAS) on The Future of Assurance (henceforth FoA). Ian Fraser was a member of the ICAS working party which developed FoA. Several research findings impacted on the FoA proposals; key examples include the proposals that assurance should be provided on annual corporate report content other than the financial statements and that audit reports should contain judgemental and entity-specific information. Subsequent to the publication of FoA, ICAS has published a further discussion paper, Balanced and Reasonable (henceforth BaR), which further progresses the public discourse on a key element (namely the provision of positive assurance by the external auditor on management commentary and on the general narrative information in the annual report) both of FoA and of the underlying research.
The financial crisis has prompted a public policy debate about the appropriate regulatory framework for financial reporting and audit. Evidence produced by this research on the current regulatory system has informed and influenced this debate in the House of Lords, particularly regarding the respective roles of auditors and audit committees. Furthermore, findings have had a significant impact on the audit procedures of Deloitte, one of the Big Four global audit firms. Their National Audit Technical Partner stated that it had prompted a reconsideration of the timing of their audit processes and the nature of interaction with their audit clients.
The Personal Finance Research Centre (PFRC) at the University of Bristol conducted research between 2004 and 2006 to develop the UK's first quantitative baseline survey of financial capability. The survey was a significant departure from previous methodologies in that it not only assessed knowledge, but also skills and behaviours. The survey results became the basis for the Financial Services Authority's (FSA) understanding of financial capability in the UK, and PFRC's analysis of the survey findings were used to set priorities for its National Strategy for Financial Capability, worth £90 million. One of the findings of the survey was that young people are much less financially capable than their elders. As a result, a priority within the National Strategy was to educate young people. A number of programs were put in place including Learning Money Matters, which offered free advice, support and resources to schools between 2006 and 2011. The program successfully reached over 2 million young people in 4,259 schools, and in 2011 economic wellbeing and financial capability became a statutory part of school curriculum in England. Overall, the FSA strategy was deemed successful, exceeding its target of reaching 10 million people. International bodies regard the FSA's baseline survey as a model for their own work and the UK methodology has been adopted by countries including Ireland, Canada and the Netherlands. The World Bank has led a substantial research and evaluation programme in low and middle income countries that uses the UK approach.
Sheila Ellwood (at Bristol from 2006) examined how managerial freedoms created through the trend to decentralise public service organisations need to be tempered through `better' accounting. Her research has led to her appointment as a non executive director (2000-2005) and a Treasury Panel member (2009-11). The research impacts on both national policy and local financial management. Her impact is seen in the financial reporting policy in local public bodies; the policy on auditing local public bodies and in the costing/ pricing of healthcare. Her work has been used in UK parliamentary committees and incorporated into government accounting manuals. International recognition includes dissemination of her work by the Chinese Treasury.
This case study focuses on the impact of research studies and their influence on International Financial Reporting Standards (IFRS) carried out by Manchester Business School (MBS). International accounting harmonisation is currently the most topical issue debated in the accountancy world. These studies have attracted the attention of practitioners, e.g. Association of Chartered Certified Accountants (ACCA), and policy makers, e.g. the UK Accounting Standards Board (ASB). The research has informed the policy debate of whether IFRS should be mandated further, and been taken up in the negotiating position of several key bodies. It has been used to justify the continued application of IFRS among UK quoted companies.
A body of research carried out at Sheffield Hallam University has led to significant changes in the accounting requirements for charities in England and Wales. Two sets of impact are presented: (A) simplified audit requirements for smaller charities from 2008/09 through enhancement of an alternative regime of `independent examination' (IE), and (B) Government acceptance in 2012/13 of the case for further simplifications in charity regulation. Over the period 2009-13 at least £15 million of charity resources has been released from mandatory audits for charities to spend on work with beneficiaries. Further benefits to the sector will follow from the latest developments.
The rapid growth of the internet from the 1990s provided both opportunities and challenges for corporate reporting. The research findings of Birmingham Business School have been highly influential in assisting regulatory bodies, public policy makers and individual businesses address these. In the UK, Birmingham's research and expertise has directly contributed to the introduction of mandatory online filing of annual returns by companies to HMRC and Companies House. The successful introduction of this measure by HMRC increased the proportion of Corporation Tax returns filed online from 42% in 2010/2011 to 96% in 2011/12, bringing significant efficiencies. Birmingham researchers also have contributed to international standards setting for company reporting through their participation in the XBRL Advisory Council, where they have successfully promoted greater transparency in reporting to the benefit of retail investors.
Between 2008 and 2011 Essex researchers were funded by the Financial Services Authority (FSA) to investigate the determinants and effects of an individual's `financial capability'. Since 2010 the results of this research have informed Money Advice Service initiatives, under the direction of the FSA, to increase the financial capability of people negotiating significant life events. The research has also raised awareness among mental health providers and policy makers of the benefits that financial management skills have in building resilience and improving wellbeing. In particular, the Money Advice Service used the team's findings to develop an online service for people experiencing divorce/separation and a redundancy guide for people faced with job loss. The research also influenced the current government's policy objectives surrounding wellbeing and child poverty.