28 Nov 2013
Disclosure was the theme of the day at the Meet the Experts conference last month, sponsored by PwC and the International Accounting Standards Board. Approximately 400 accountants, auditors, regulators, investors and companies from around the world gathered in London to discuss a range of financial reporting topics, from the conceptual to the very technical.
“Good disclosures are the ones that tell a story”, said Richard Mathieson, Managing Director of asset managers BlackRock. But not everyone agreed on what should go into reports and what the end result should look like.
Wayne Carnall, a PwC partner and former SEC chief accountant, said that a ‘less is more’ approach is a good place to start. But HSBC’s Chief Accounting Officer, Russell Picot, admitted that cutting disclosures is tough to achieve in practice.
Many speakers referred to companies’ tendency to err on the side of caution by using boilerplate disclosures. They urged regulators to cut back on their requirements (some 45% of conference delegates blamed standard setters for excessive disclosures). But Stephen Cooper of the IASB responded: “We’re not the only ones to blame... Users like disclosures, and if you ask anyone which should be taken away, they find it very hard to choose”.
A number of speakers exhorted preparers to experiment. They kept coming back to the point made by PwC Global Assurance Leader, Richard Sexton, in his introduction to the conference: innovation is going to be a big part of improving disclosures.
Sue Harding of the Financial Reporting Council (and a participant on one of the discussion panels at the conference) has long been a proponent of companies experimenting with disclosures. She talked about the FRC’s Financial Reporting Lab and how it provides a safe space for them to do so. Mr Mathieson also urged innovation, especially “in terms of how everything hangs together”. He outlined the frustration capital providers feel when cohesion in company disclosures breaks down.
However, Hans Hoogervorst, chairman of the IASB, sounded a cautious note on innovation, expressing apprehension about the International Integrated Reporting Council’s ambition to provide the structure for the report of the future with its Integrated Reporting Framework. “I’m worried that it might add unnecessarily to the disclosure burden”, he said, “but let’s see”. But Mr Sexton urged delegates to get behind integrated reporting. “Integrated reporting is a fabulous opportunity to think more broadly about financial reporting. I encourage you to be bold.”