ICFR Benchmark Report 2022
21/10/22
The survey aims to provide valuable insight into what characterises the most efficient and effective ICFR (internal control financial reporting) frameworks and at what level of maturity Scandinavian companies are in terms of ICFR.
Are we keeping up with trends and new requirements?
When we conducted the ICFR benchmark surveys in 2019 and 2016 on Norwegian companies, we noted a significant potential for improvement of overall ICFR maturity.
In this year's survey we have also invited Swedish and Danish companies to participate to see if there are any differences or similarities between Scandinavian companies. Were we expecting to see improvements in 2022? The short answer is yes, as it is our general market observation that companies appear to have an increased focus on governance and internal control.
Companies have also become more receptive to implementing technological tools supporting their governance, including ICFR. While the 2022 survey results indicate an improvement in overall ICFR maturity, there is still potential for improvement in several ICFR areas.
The 2022 survey also aims to provide insight into what systems and controls companies have established on internal control over sustainability reporting (ICSR).
Highlights
- 66% use an acknowledged framework for ICFR
- 33% perform their risk assessments at FSLI level
- 75% have defined and documented an ICFR control design
- 37% have implemented a defined framework for sustainability reporting
ICFR maturity
The results from this year's survey show an increase in overall ICFR maturity by 7 percent compared to 2019. We see an increase in all areas within ICFR, except scoping, which surprisingly is unchanged. Mature companies use scoping to determine which business units, processes and financial statement item lines to prioritise for ICFR purposes, and to what extent.
The survey responses show that Norwegian companies' average overall ICFR score is higher than the average score for all Scandinavian countries combined. This indicates that Norwegian companies, in isolation, have had a noticeable increase in ICFR maturity since 2019.
Internal control over sustainability reporting
Companies are increasingly challenged by stakeholders to be more transparent about their management of sustainability issues. The demand for increased reporting is also driven by new and existing governmental regulations.
37 percent of respondents report that they have implemented a defined framework for Internal control over sustainability reporting. Manual registration, use of spreadsheets and lack of interfaces between systems makes controlling and monitoring ICSR challenging for most survey respondents.
– In the ICFR benchmarking survey we seek to provide ICFR leaders with guidance and insights into what their peers are doing in the field of ICFR. We also present elements of what we consider to be a good practice ICFR Framework, says Tanja Sæland, director at PwC Norway.
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