My talk on 8th Feb 2015
I spoke at the Workshop on Financial Reporting conducted on the eve of the ICAI FR Awards night. After the speakers forming part of the jury had listed the flaws by companies in annual account presentation I delivered an 18-minute talk on Lessons from unusual examples.
The essence of what I spoke was as under.
- Have a process. In the drawing up of financial reporting statements we need to have a process. I explained the power of process with the help of a mind reading game.
- If something in the financial statement appears to be too good to be true it is in fact too good to be true. I explained this with the help of a game involving an auction.
- Financial statements need to be kept simple. They shouldn’t be such that they aren’t even understandable by professionals. They should be surely such that they are understandable to the average investor. A video clipping from a movie helped elucidate what it is to help keep things simple.
- The grass is always greener on the other side. We tend to think that the statements of others are better than ours. An exercise involving two envelopes in money inside was used to demonstrate this.
- We must be careful when we employ analytical tests. Averages can be wrong. A very effective example from the game of crickets helped drive home the point.
- Just like the medical profession comes closest to being the profession of God, we belong to the profession of trust. In preparing and auditing financial statements we must keep this in mind. We must not let down the trust of the common man. The story of a former CEO of PepsiCo and a CEO of Coke was used to drive home this point