Transparent disclosures

Organisations should be accountable to their stakeholders. Financial reporting is fundamental to demonstrate accountability. They should also implement procedures to independently verify and safeguard the integrity of the company’s financial reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information. Imperfections in the financial reporting process will cause imperfections in the effectiveness of corporate governance. At times, the governance process is made ineffective so that financial manipulation is made easy by those in governance.
Following the accounting standards and other disclosure standards needs a mindset that recognizes that stakeholders have a right to information. Most of the time Directors are of the view that it’s not necessary to provide all information to stakeholders. Typically, related party transactions (RPT) are always non transparent. So what do they want to hide?
* favorable pricing to related parties
* fund transfers
* investments(using the PLCs money) made in personal companies but below the 20% threshold to avoid disclosures
* appoint different people to the Boards so that direct significant influence cannot be traced to enforce disclosure
* write off investments made in related companies to avoid consolidation or disclosures in the future.
These scenarios require more detailed explanations to demonstrate how it affects transparency in reporting. But I’m sure a knowledgeable reader will understand how these frauds/misreportings are carried out.


About surenraj

“Views expressed are my own”
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