Spotlight on Investors
Put investors at the heart of the financial system, say experts
– Study shows current fragmented system is reason behind investors' lack of confidence
The latest report by ACCA (the Association of Chartered Certified Accountants) and Grant Thornton revealed that investors want to see new and improved accounting, auditing and corporate governance standards developed in a more integrated manner, and that any reform proposals be based on solid understanding of investors’ needs and priorities.
The report, entitled Putting investors at the heart of the financial system: Malaysian perspectives, is based on the insights gained from a series of roundtable discussions facilitated by ACCA and Grant Thornton in the last quarter of 2011 involving investors and investor representatives from a number of markets. It revealed their views in relation to existing global financial and accounting standards, the current and future challenges, their aspirations for reform, and the potential barriers they foresee in addressing their concerns.
As a result of the current fragmented way in which solutions are being proposed and the failure to place investors at the heart of the reform process, investors, businesses and their advisers remain uncertain about the global financial markets.
Jennifer Lopez, country head of ACCA Malaysia said, "The general consensus is that adjustments to the current financial reporting framework are needed if they are to be relevant and value-creating for investors."
The report reveals the following:
* Investors want public listed companies (PLCs) to provide more forecasts as well as information to help analysts to create and evaluate forecasts.
* Financial information must be transparent and credible, thus the unanimous call from investors that good corporate governance be upheld.
* Investors see potential for the development of integrated reporting to help fill some of their information gaps. Integrated reporting that more closely aligns risk management with performance, and the provision of clear environmental, social and governance reports could enhance investor confidence in management’s ability to perform in the future.
* Investors want more quality audit report, which tells them the effectiveness of the company’s management and the corporate procedures in place.
* While investors believe their needs are too often overlooked, they also acknowledge that they need to play a greater role in the development of new accounting standards and raise their profile with standard setters, regulators and other key bodies to ensure that their needs are prioritised in the financial reporting system.
ACCA and Grant Thornton welcome the debate on this matter as this should enable greater clarity about how the needs of investors can best be met, and by extension, how the effectiveness of the accounting profession can be increased and global markets and economies can be strengthened.