Russell G. Weiman ('73 Accountancy), National Managing Partner of Assurance and Advisory Practices, Grant Thornton LLP, put it bluntly when he told students attending his Lyceum presentation on October 18 that the challenges and opportunities in the accounting profession today are immense but equal.
“I won’t kid you,” said Weiman. “In my past 40+ years in the profession, the pace of change has never been greater. There are a lot of people churning out literature that you have to read and follow, and there is no ‘FAS 133 for Dummies.’ You have to read everything in pronouncements to make sure there is nothing that will trip you up.”
But it is not only the volume of new pronouncements, it also is the increasing complexity, and the potential resulting consequences, he added.
Given that auditors are responsible to investors, they need a solid understanding of investors’ views and expectations regarding financial reporting, according to Weiman. Likewise, there is an expectation gap with respect to the role of an auditor.
“The audit of today provides reasonable assurance that financial statements are fairly stated and free of material misstatement,” he said. “Still, investors want richer and more transparent reporting of auditor's findings. Investors preferences along these lines, however, may require fundamental changes in the conduct of audits and reporting of financial and operational results.”
The international convergence of accounting principles is a hot topic and is gaining momentum, said Weiman. Yet despite cooperation between the International Accounting Standards setters and Financial Accounting Standards Board in the U.S., he does not expect it to happen tomorrow.
“Given that our world is so global today, why not just have one international financial reporting standard (IFRS)?” he asked the students. “Because the challenges posed by business, culture, regulatory and politics are many.”
“If you could clone a company in the United States and put it in the United Kingdom, it would look completely different on the financial side,” he explained. “Also, many countries, particularly those in the European Union, do not use a pure International Financial Reporting Standards, but change it to meet political needs.”
“We must insure that the standard is actually an improvement, and not just convergence for convergence sake,” he added.
A new technology called eXtensible Business Reporting Language (XBRL) is helping businesses to share financial information more efficiently and effectively, and according to Weiman, “It’s the greatest thing since sliced bread.”
“XBRL can tag data and so that users can access, analyze and compare data across companies. These tags convert static information into data – think ‘bar code,’ he said.
The current chairman of the Securities Exchange Commission is very enthusiastic about XBRL and Weiman predicts that it will be required in filings within the next year or so.
“Some companies use XBRL for their filings already and Grant Thornton is the first accounting firm to contribute to its use for an eventual successful adoption,” he added.
Mr. Weiman oversees the Grant Thornton audit, business advisory, economic advisory and transaction advisory service lines and is responsible for risk management, service and technical quality, audit training, operations, and interactions with the PCAOB and other regulatory bodies (as Weiman put it, “I’m responsible for basically everything except tax!).” Under his leadership, the practice has more than doubled over the last four years.