The latest batch of financial reporting related consultations is quite a mix, covering audit market concentration, the future of narrative reporting and leases.  As ever I would be pleased to receive your feedback on these latest consultations:

House of Lords: Inquiry into Audit Market Concentration

The Select Committee on Economic Affairs has decided to conduct an inquiry on Auditors: market concentration and their role.  Audit is dominated globally by the Big Four.  The narrow field of choice raises concerns about competition and the quality of audited accounts, and about possible conflict of interest between audit and consulting arms.  Questions have also arisen whether auditors could have mitigated the banking crisis of 2008 by alerting investors to the riskiness of assets held by banks.  The list of fourteen questions is attached.

The deadline for written evidence is 24 September. 

Department of Business, Innovation and Skills: The Future of Narrative Reporting

This consultation is part of implementing the Coalition Agreement commitment to "reinstate an Operating and Financial Review to ensure that directors' social and environmental duties have to be covered in company reporting and investigate further ways of improving corporate accountability and transparency". 

The objective of the consultation is to look at ways to drive quality of company reporting to the level of the best and thereby enable stronger and more effective shareholder engagement. The consultation paper is open in exploring all options - regulatory and non-regulatory - to achieve the objectives. The consultation focuses in particular on the business review provisions, but as part of its exploration of wider narrative reporting, it also looks at issues relating to the Directors' Remuneration Report.

The consultation closes on 19 October and is seeking views from all those concerned in company reporting including companies, their members and others who regularly use company reports. The Government will publish its conclusions at the end of the year.  The consultation document is attached.

IASB: Leases

The IASB is proposing a ‘right-of-use' accounting model where both lessees and lessors record assets and liabilities arising from all lease contracts. The assets and liabilities are recorded at the present value of the lease payments which would then be amortised over the life of the lease and subject to impairment testing. A lessee could revalue its right-of-use assets. The right-of-use asset would be presented within the property, plant and equipment category on the balance sheet but separately from assets that the lessee owns.

The consultation document is open for comment until 15 December 2010 and can be found here: http://www.ifrs.org/Current+Projects/IASB+Projects/Leases/ed10/Ed.htm