When significant financial reporting issues arise, executives and directors often have little warning. Recent Financial Accounting Standards Board (FASB) developments with respect to “principles-based” accounting rules and fair-market accounting valuations as well as increasingly stringent filing deadlines mandated by the Securities and Exchange Commission (SEC) for large accelerated filers, are likely to further complicate the financial reporting process.

In this issue, we address the process of understanding and continuously evaluating an organization’s financial reporting risk profile (FRRP), and why this process is important to management and the board of directors.