Where Auditors Could Play a Greater Role in Company-Prepared Information

While auditors will continue the essential work of auditing historical financial statements, they could also bring their ability to enhance trust and confidence in other types of data and information issued by companies. Investors and others are increasingly focused on how companies measure the value they are creating for their shareholders and stakeholders. While some of these measurements are contained within financial statements, others exist beyond financial statements in other company-prepared information about value creation. In communications about value creation, it is important that there is clarity regarding what companies are measuring, quality in the preparation of the measurements, and good oversight of the process. Also critical for investors and others to understand is whether the information has the level of trust and confidence that is brought by an independent perspective. Having auditors associated with this information brings discipline to management’s process and helps minimize the chances of misunderstanding, mistakes, or challenge. Auditor association signals to stakeholders the importance of the information being reported.

Percent of institutional investors that said their investment decisions are frequently impacted by an evaluation of a target company’s nonfinancial disclosures.
EY, Is Your Nonfinancial Performance Revealing the True Value of Your Business to Investors?