ICMA International: Message from Abdul Rahim Suriya FCA, FCMA Chairman, Evaluation Committee

TEXT: Transparency builds trust and promotes accountability and lack of transparency results in distrust and a deep sense of insecurity.

Trust, confidence, transparency, and accountability toward the stakeholders can be established with the support of good governance and good corporate reporting. The United Nations considers transparency an important factor in measuring good governance. The International Federation of Accountants (IFAC), defines transparency as the process of making information accessible to the general public.

Transparency requires disclosing both positive and negative aspects. According to my friend Mr. Abdul Rauf Essa, Half Truth will not do, he says that “Telling Half Truth is like lying.”

It is noted that many organizations don’t disclose with the objective of transparency but just follow the rules. Sometimes the tick-the-box approach is deployed.

ICMA Pakistan and CA Pakistan recognize their social responsibilities to the public in general and to investors in particular, and they serve as a bridge between the two. As a result, both organizations will organize a ceremony this year, as they have for the past 20 years, to present awards to companies whose financials are determined to be the most detailed and compatible with various local and global standards.

In order to achieve commercial success, listed firms must offer information in annual reports that is of high quality and transparent. Investors and other stakeholders are influenced by the quality of information offered in annual reports. Furthermore, for an efficient capital market to function, accurate, comprehensive, and timely information must be disclosed.

I wish both of these accounting bodies success in their efforts to promote a culture of good governance and conformity to local and international regulators' standards for the express goal of improving the corporatized Pakistan.

I'd like to congratulate all of the companies that participated in this year's BCSRA Awards 2020, as well as the members of the Evaluation Committee, for their efforts in making this ceremony a milestone in Pakistan's corporate history.

Best Corporate Report Award: It was launched 22 years ago. It encourages companies to publish timely, accurate, informative, and well-presented annual reports for stakeholders. Annual reports of the participating companies are judged through an evaluation process based on a criteria. The criteria is reviewed every year to ensure that it is aligned with the international best practices. This year disclosures for IT governance and cyber security risk are added in the criteria. The BCR criteria draws inspiration from the ‘Content Elements’ (disclosures) of the International Integrated Reporting Framework (IR). I am pleased to claim that the disclosures made in annual reports in Pakistan by few companies are at par and in some areas better than disclosures made by companies of developed world.

Corporate Reporting is now not limited to financial information. It has broadened its focus to cover key strategic, social, governance, and environmental risks, long-term business sustainability, and other non-financial matters.

Sustainability Report Award: This was initiated 11 years ago for promoting responsible reporting by entities covering economic, environmental and social performance of the business according to a study, by year 2030 with a population of 8.3 billion people, we will need 50% more energy, 40% more water and 35% more food. We as responsible businesses have to act now to remain sustainable when the resources become scarce. Hence the concept of sustainability becomes more and more important for our future generations.

Criteria for Non-Profit Organizations (NPOs): It is estimated that there are approximately 10,000 functional NPOs in Pakistan. These NPOs receive substantial amounts in Zakat and Donation. However, they usually lack transparency and do not publish proper annual reports. NPOs need to be transparent and should disclose to providers of funds how they used specific funds particularly Zakat funds. In view of this a separate criteria for NPOs is introduced.

Recommendation to PSX:

• It is noted that while announcing top companies award, PSX does not give much consideration to transparent corporate reporting. Out of around 550 companies at PSX only 115 companies have participated this year in this BCR competition. PSX recognition toward transparent reporting will build trust among investors.

• The Evaluation Committee had been recommending to PSX for giving some weightage to the winners of this award in the PSX criteria of the best-performing companies.

• PSX Rule Book requires submission of Annual Report but it does not give guideline for contents of annual report.

• PSX is also requested to follow our BCR criteria for preparing its own Annual Report.

Recommendation to SECP:

• SECP is requested to instruct all Listed Companies, Public Sector Companies, and NPOs to adopt our BCR criteria for voluntary compliance in developing their annual reports.

I would like to thank our distinguished Chief Guest, Guest of Honor, Guest Speakers and congratulate the winners. Special thanks to the Participating Organizations, Presidents of both the Institutes, BCR Evaluation Committee Members, and the Secretariat team led by Ms. Farheen Mirza and Mr. Asim Husain Khan for their support and untiring efforts for this program.

Copyright Business Recorder, 2022