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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 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.
Research on International Financial Reporting Standard 8 `Operating segments' (IFRS8), undertaken by academics in the University of Dundee's School of Business, has been used to frame the international debate concerning listed company reporting of disaggregated (segmental) information about business unit and geographic activities. Three bodies involved in regulation and compliance, have drawn on the research to inform their positions and strategies in relation to the standard. Firstly, the IASB's review of IFRS8 was informed by the research. Secondly, the key findings were fed into the Financial Reporting Council's proposals to amend IFRS8. Thirdly, the research underpinned the Institute of Chartered Accountants of Scotland's (ICAS) response to the IASB's request for information on how the standard was being applied, what challenges were encountered and associated costs.
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.
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.
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).
Aberdeen public sector accounting research into adopting accruals accounting, the application of international accounting principles and standards, the treatment of privately financed public assets and the basis of Whole of Government Accounts was used extensively by the principal researcher in advisory work for UK and devolved governments, international agencies, professional bodies and regulators. It contributed directly to changes in the way governments budget, manage and report the performance of resource use, to increased stakeholder awareness of public accounting issues nationally and internationally, and to improved public understanding of these complex issues. It mainstreamed accounting research into the public policy process.
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.
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.