Global convergence in financial
reporting, audit and ethics may not be a given, but one area where
it is missing altogether is corporate governance, according to
European Financial Reporting Advisory Group chair Stig

“That is the missing link to ensuring full transparency in
financial reporting,” Enevoldsen said.

He told The Accountant that while it is hard to
evaluate how corporate governance stands on a global level, he
believes there is significant variance and has observed different
operations between countries in areas including Asia, the US and

If reporting and audit standards are set on a global level,
there also needs to be work on converging corporate governance, he

“I think this is the missing link in reporting, because
governance is of such importance to reporting,” Enevoldsen

The auditing profession began global convergence of both
accounting and auditing standards in the early 1970s, and the
profession has continued to drive the process.

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“But there has never been the same drive for corporate
governance,” Enevoldsen said. “We have never seen a global
corporate governance attempt because you don’t have national
corporate governance bodies that seem to work together

Enevoldsen suggested there could be a role for the accounting
profession in initiating global corporate governance

He said the key is getting the profession in many different
countries involved.

“It would be a long term process to see if there is a better
model, how all the interests can be met, and argue and debate and
have discussion papers,” he said. “But if we don’t start long term
processes, we never get there.”

Frank Curtiss from the International Corporate Governance
Network (ICGN) said he agrees with Enevoldsen and that the
challenge is to use non-financial reporting to bring greater
transparency to mainstream reporting.

“It certainly reflects what we are trying to do,” he said.

Curtiss said the ICGN’s advocacy for non-financial reporting is
not a war with the audit profession or standard setters.

“They recognise [the importance] themselves. They want to do
something about it and we welcome that,” he said.

“It is also necessary for investors to make clear what they
want, they after all own companies. Companies ought to react
towards what owners want and in these difficult times we need all
the information we can to assess risk properly and to take better
investment decisions.”

Carolyn Canham