Nick Anderson, Board Member, International Accounting Standards Board and former CRUF UK participant, shares his experiences of working with the CRUF.
From time to time I still attend CRUF meetings. Always informative and enjoyable, these gatherings represent an opportunity to share insights, ideas, views and even frustrations about the development of financial reporting. The difference today compared to earlier meetings is that I no longer participate as an investor, but as a member of the International Accounting Standards Board. Back in 2005 I was persuaded to chair the inaugural meeting of CRUF. Without having been involved in CRUF, it seems implausible that I would have developed an interest in better financial reporting that led me to the IASB and a new chapter in my career.
Most of my working life has been in equity markets, either managing money or managing research teams. When I first started in asset management my knowledge of accounting was at best rudimentary. Over the years an understanding of the audited financial statements came, for me, to play a pivotal role in the investment process. Although there are many other factors that influence security prices in the short and longer term, it was the accounts that were the foundation for my analysis.
Effective communication, including the provision of audited financial statements, also has a role to play in holding management to account and helping to ensure that resources are allocated in an efficient manner. At a time when we are faced with increased demand on our scarce resources, standards that bring transparency, accountability and efficiency to financial markets are more important than ever. However, some still ask “but what’s in it for me?” CRUF participation offers an opportunity for professional development; to improve your knowledge of the financial statements and make an understanding of accounting your friend in helping reach better decisions for clients.
As someone who entered the investment profession without any formal accounting training and before the CFA qualification became a prerequisite for fund managers and analysts, I’ve learnt my understanding of how the financial statements tell the story of a business on the job. A former colleague was instrumental in developing my thinking while sometimes it was necessity that drove my quest for a better appreciation of how the numbers work. CRUF also played a big part in my accounting education, providing opportunities to engage with experts and others involved in the standard setting process.
However, CRUF represents much more than this. It is an opportunity to work with other users of financial statements, who share a common desire to improve communication between companies and the providers of capital. There is undoubtedly strength in such collaboration and CRUF has grown to become a respected force in the financial reporting arena.
CRUF meetings can be educational, thought-provoking, sometimes entertaining, occasionally frustrating and even therapeutic. Many of those individuals that I first met through CRUF, I am still in touch with today. In an arena where the views of users are critical, but not always well represented, CRUF plays an important role in helping ensure the investor voice is heard. For the IASB, engagement with users is an essential element in improving our standards, and I look forward to seeing you at a CRUF meeting soon.