How to Make an Audit Report Useful

Updated July 22, 2013, 12:00 a.m. ET

How to Make an Audit Report Useful

Auditors’ letters are boring and uninformative. In the future they may still be boring, but at least they’ll say something.

Face it: It is going to be pretty hard to ever make audit reports scintillating reading. But they definitely could be made a lot more informative. Audit reports are those tedious letters in which a company’s outside auditor attests that its financial statements are accurate. In fact, they’re so tedious, and offer so little information, that most investors can be forgiven for skipping them. But now many want to revamp the reports so they provide more information about the auditor’s findings—from potential risks that could affect the financial statements to areas of the audit that the auditor thinks are particularly important. The graphic at left (click to enlarge) is a mock-up prepared by The Wall Street Journal of what a revamped audit report might look like, drawing on ideas suggested by regulatory agencies and accounting groups around the world. There is no uniform agreement on what changes to make, and no revamp will incorporate all these ideas. U.S. audit regulators haven’t even issued a formal proposal yet indicating which ideas they will pursue. Though a revamped report would still be jargon-filled—and probably longer because of the suggested additions—investors might get more out of it. In other words, at least the tedium might be worth it.

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About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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