Whilst all this is playing out, it is clear that we will need to invent new regulatory and ethical regimes. Current governance methods are already outdated and is not providing the assurance business and society needs. One of the key changes that we have detected is that intangible drivers make up a much larger percentage of organisational value. The current accounting standards do not support this trend.
It is against this backdrop that we, along with Cambridge University have undertaken an extensive study on how accounting and reporting could look in the 21st Century. Our findings indicate that investors and other stakeholders find little value in the way that companies report today.
GFOA recommends that if a government chooses to use CP in its investment portfolio, it cautions government investors to: 1) verify whether commercial paper is allowed under state statute and their investment policy and 2) determine whether they have the expertise to understand, evaluate and monitor commercial paper before deciding to include commercial paper as part of a diversified investment portfolio. Government investors should regularly evaluate whether the incremental yield associated with commercial paper justifies the additional credit and liquidity risk associated with this type of security. Governments choosing to use CP should develop policies and procedures to manage the associated risks. Government investors should consider: