The Anti-Fraud Collaboration, a coalition of the Center for Audit Quality, Financial Executives International, the Institute of Internal Auditors and the National Association of Corporate Directors, has released a new report on how organizations can deter fraud and improve financial reporting.

The report is based on two workshops the groups hosted last year. It makes several recommendations for improving accounting policies at companies:

• Accounting policies should adhere to technical accounting guidance. Supervisors and managers are responsible for their implementation. The policies need to be understandable to non-accountants who may not be familiar with the nuances of technical accounting.

• Process should be married to policies. Accounting policies need to be reviewed at regular intervals and address how to uncover and monitor changes in activities that affect accounting.

• Policies should be tested in the field prior to implementation, and then monitored for compliance post-implementation.

• Accounting policies related to revenue recognition should be granular because even slight changes in contract terms can have a major impact on revenue.

“Companies are sharing leading practices and voluntarily working with regulators to help deter and detect financial reporting fraud,” said CAQ executive director Cindy Fornelli in a statement. “The Anti-Fraud Collaboration is pleased to present these recommendations to help companies improve their accounting policies and system of internal controls. Investors, our capital markets, and public companies all win when we work together to combat fraud.”

The report also includes some recommendations about internal control over financial reporting, or ICFR:

• Tone at the top is an essential part of an ICFR regime.

• A risk-based evaluation is the best way to achieve effectiveness and efficiency in ICFR.

• Internal controls over unusual and nonroutine transactions are sometimes overlooked or given less attention than core processes when developing an effective ICFR regime.

“Our members are highly committed to the deterrence and detection of fraud and are focused on their responsibility toward that effort, which includes overseeing the preparation of accurate financial information and the importance of designing, monitoring, and maintaining effective internal control over financial reporting,” said FEI president and CEO Andrej Suskavcevic. “We fully support the efforts of the SEC to promote cooperation and self-reporting.”

At the workshops last spring, in New York and San Francisco, representatives from the Securities and Exchange Commission’s Fraud Group and the Office of the Chief Accountant, along with the Division of Enforcement and Investigations at the Public Company Accounting Oversight Board, emphasized their close cooperation in working on anti-fraud objectives. The SEC and the PCAOB are in regular communication on investigations. The regulators noted that the reporting of non-GAAP financial measures has been getting a great deal of attention inside the SEC. The report noted that companies should be aware of the exposure they have from reporting non-GAAP financial measures that do not comply with SEC regulations.

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.