NEW YORK, Jan. 21, 2016 /PRNewswire/ -- In addition to standard financial reporting responsibilities, internal controls over financial reporting and data security leaped to the top of the list of compliance issues that cause sleepless nights for executives who prepare corporate financial information, according to a new poll by U.S. audit, tax and advisory firm KPMG LLP.
The poll of nearly 400 financial executives at KPMG's 25th Annual Accounting & Financial Reporting Symposium found:
- Nearly a third (31 percent) of respondents said internal controls over financial reporting was their highest concern beyond their financial reporting responsibilities,
- About 26 percent of respondents said they were most worried about data infiltration and IT security, which was at the bottom of last year's list,
- Some 20 percent of executives worried most about tax compliance, and,
- The specter of future regulatory mandates, which had topped the 2014 list of compliance concerns expressed by executives at last year's Symposium, troubled 17 percent of respondents the most.
"Clearly, the existing regulatory focus on internal controls over financial reporting and the here-and-now have overshadowed last year's fear of any unknown future regulatory changes that may or may not occur, while continuing headlines of data breaches have raised concerns across the C-suite," said John Ebner, National Managing Partner – Audit, for KPMG, and a Symposium co-host. "The poll results demonstrate the significant and broad responsibilities that fall to the CFO's unit in developing the company's financial performance and other financial communication reports."
Symposium Co-Host Thomas Duffy, KPMG's Global Chief Operating Officer – Audit, said executives continue grappling with managing the complexity of corporate financial reporting.
"Outside influences and potential disruptions pose risks to financial information and a company's operations," said Duffy. "As executives involved in the financial reporting process consider risks, they need to look beyond the numbers to consider how security breaches, supply chain interruptions and other operational risks could impact the financial statements and other disclosures."
Implementing New Standards
Meanwhile, less than 29 percent of corporate financial preparers say their companies have a clear plan to implement the new revenue recognition standard, with less than 13 percent of the respondents saying they have completed an assessment of the effects of the new standard and are planning implementation. As many as 82 percent, however, say they are still assessing its effect (55 percent) or have taken no action (27 percent) while they await the completion of the standard setting.
Regarding the new leasing standard expected in early 2016, less than 13 percent say they have a clear plan for implementation, and only 9 percent of the respondents said they would implement this standard in 2016 or 2017. As many as 67 percent of those polled said they expected implementation in 2018 (18 percent) or 2019 (49 percent).
"Both standards will require significant effort, and these results demonstrate the complexity of implementation across entire organizations," said Ebner.
The poll also found that accounting standards could prompt changes in business models as companies may alter their own vs. lease or alter how they execute contracts with customers in response to the leasing and revenue standards, respectively. In addition, 22 percent of those polled said that they would or might consider providing International Financial Reporting Standards-based supplementary information if the SEC were to grant domestic registrants permission to do so.
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About KPMG LLP
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Contact: Joanne Fischetti
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SOURCE KPMG LLP