Introduction and Background
1.1 WHAT THIS BOOK IS ABOUT
This book offers important and unique insights into how the largely unobservable financial reporting and auditing process in UK listed companies actually works in the current UK regulatory environment, which has undergone significant change in the last eight years. It explores how finance directors (i.e. Chief Financial Officers (CFOs)), Audit Committee Chairs (ACCs) and Audit Engagement Partners (AEPs) interact with each other to reach agreement on key financial reporting issues as the financial statements are finalized. It also examines how the new regulatory regime is being implemented, by exploring corporate governance practices relating to financial reporting and auditing issues — part of the context within which these interactions take place. The governance practices mainly relate to the role of the audit committee and the audit committee chair.
By means of a wide ranging questionnaire survey and nine company case studies, we identify and analyse the interaction process involving these three principal parties in (a) discussing and negotiating financial reporting issues and (b) reaching the agreed financial reporting outcome of each interaction that took place. We also explore the key influences on the interaction outcomes. Key findings and conclusions are briefly summarized at the end of this chapter. The survey and company case studies were carried out in the UK in 2007/8. The changes to the UK's financial reporting, ...