MEMBERS of the local accountancy board are calling for fresh discussions on the timelines given for companies listed on the Jamaica Stock Exchange (JSE) to file audited financial statements, after seeing several suspended for failing to produce them on time.

Companies listed on JSE can choose to publish their audited financials within 60 days after the end of their financial year, or choose to publish an unaudited fourth-quarter report in 45 days after the end of the financial year and then audited numbers 45 days after that. Most companies choose the 60-day option, not waning to file reports twice.

However, following the COVID-19 pandemic and changes to the accounting standards, less than half of companies on JSE are reporting on time. Four had trading in their shares suspended so far this year after failing to submit their audited numbers 90 days after the original deadline.

“Clearly, there have been changes in relation to the auditing standards and accounting standards, and it might be an opportunity for the stakeholders to have a sit-down to review, to determine if we need to review the timelines that were agreed in the past. There are some key questions that need to be answered. I think the purpose of setting the timelines that we have now was that we thought it would improve the quality and timeliness of information to the market. If it’s the case where shifting the date a few days won’t affect the market, there might be an opportunity to review those dates,” said Eric Scott, president of Institute of Chartered Accountants of Jamaica (ICAJ), in a recent interview with the Jamaica Observer.

Scott’s comments come at a time when JSE’s regulatory arm (Regulatory, Market & Oversight Division) has made comments in its monthly reports that the exchange is looking to review the timelines for filing audited financial and annual reports later this year.

Still, a member of ICAJ’s Accounting Standards Committee, who asked not to be named for this article, noted that late filings are due to several factors, including the continuous evolution of accounting and auditing standards, and the difficulty firms face to attract and retain people to do auditing. The ICAJ committee member is a partner with an audit firm, and noted that new International Financial Reporting Standards (IFRS) guidelines developed by International Accounting Standards Board (IASB) are being implemented to improve the quality of financial reports and to ensure comparability of financial statements amongst jurisdictions while making them easier to read by general users.

The other extreme also pertains to the auditing standards, which are meant to preserve audit quality, while recently implemented standards add a layer of complexity to the auditor’s role.

However, auditors globally are now being challenged as well with the shortage of talent in various markets, with North America estimated to be short 300,000 auditors. Some of the accounting firms in those markets are now recruiting talent from Jamaica, forcing auditing firms to pay more to retain talent, and with the added cost pushing audit fees 20-40 per cent higher in the last three years.

So, what is the proposed solution to address these challenges?

“I think if you were to survey a couple of the CFOs [chief financial officers] and auditors, you may find that there are differences in the financial reporting infrastructure that exists in Jamaica versus other jurisdictions. That infrastructure is people, technology, know-how, etc. Some of these things will be impactful to your ability to report in a particular time,” the auditor noted.

Before May 2009, companies on JSE had to report audited financials within 90 days. In Barbados and Trinidad & Tobago, the 90-day reporting requirement still stands, while in The Bahamas audited financials and annual reports are to be submitted in 120 days.

In Canada non-venture exchanges require 90 days, while on venture exchanges that cater to smaller companies the timeline to file audited financials is 120 days. United States of America companies with shares held by the general public valued more than US$75 million must file within 60-75 days, while all other firms are given 90 days to file annual reports.

Here in Jamaica, companies shy away from reporting in 45/90 days to reduce the risk of variances between the two reports and to avoid the additional workload to get both reports aligned.

“The larger companies, I would say, have a different issue in that they may have resources but their accounting is likely to be much more complex because of their size, dispersion; and some companies listed on the stock exchange have subsidiaries in multiple countries, currencies and industries. So to bring everything together, even for a large company with significant resources, it’s a challenge as well, and accounting only gets more complex,” stated ICAJ member Andrew Messado on the difficulties faced by even larger firms.

While some persons in the general public may think an audit is a simple process, it was highlighted that financial statement audits are not. If a client has multiple subsidiaries in different jurisdictions, investment properties, pension benefits, financial assets covered under IFRS 9, it gets more complex.

Although the discussions have just begun, the accountants are hopeful they will bring meaningful change to address the challenges.

“I think one of the things I’ve been personally talking and sharing about is the change in technology that has happened within the last two years, and it will be interesting to see how that affects the landscape going forward. With all of this artificial intelligence that’s now available I know a lot of the [audit and corporate] firms have invested in this technology. While the requirements have gotten greater, that’s the factor that may help the future in relation to ensuring companies can navigate the requirements and meet the deadlines,” Scott closed.