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Integrated Assurance at Philips Electronics N.V Case Solution
| Solution Id | Length | Case Author | Case Publisher |
|---|---|---|---|
| 795 | 384 Words (2 Pages) | Robert G. Eccles, Daniela Salzman | Harvard Business School : 412054 |
A Word File
There are two key players under scrutiny, KPMG and Phillips. The integrated reporting tends to amalgamate the non-financial (e.g., environmental, social, and governance (ESG)) performance metrics with the financial performance metrics.
Additionally, litigation charges were a huge expense on KPMG, which came in due to the unpredictability of fraud within public documents that led to restatements. To limit the cost associated with such failed audits, KPMG developed a risk-averse attitude by limiting the area covered under an audit. Thereby, they only reviewed the ESG data but considered limited assurance agreements. Two key elements or challenges are: quality of internal control system with respect to both financial and non-financial data and the subsequent creation of global standards for the purpose of measuring and reporting nonfinancial information. Audit firms had yet to develop processes so they may provide positive assurance on non-financial data, as well. An added concern from the critics pertained to the reduction in available information relative to ESG in the separate sustainability report.
Case Analysis for Integrated Assurance at Philips Electronics N.V
Following 2013, growth in carbon regulation was a step towards a sustainable future. Sustainability is the source of competitive advantage in the present world. Philips defined a clear way of differentiating itself through an intense focus on research and development of green products. By 2010, 38% of all sales consisted of green products. Additionally, health and wellbeing are becoming an increasing concern on a global level.
Phillips, on a voluntary basis, accentuated its integrated reporting efforts on its website, with respect to sustainability analyst, financial analyst, and employee. Essentially, the motivation came from; increased efficiency, improved communications, and abating costs. Phillips issued its first integrated report in 2008 and had been improving on them since then.
The auditing fee charged to Phillips decreased to 20.4 in 2010 from 19.7. Additionally, the survey depicts a lack of benefit to clients in 2010.
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