IASB Tackles Corporate Disclosures rules aimed at preventing companies from overwhelming investors with useless information

April 8, 2014 Leave a comment

March 25, 2014, 1:55 PM ET

IASB Tackles Corporate Disclosures

EMILY CHASAN

Senior Editor

International accounting rule makers on Tuesday proposed changes to corporate disclosure rules aimed at preventing companies from overwhelming investors with useless information.

The board said it hopes to get accountants and managers away from a check-the-box mentality in reporting financial results, and instead emphasize clarity for investors.

“Financial reports are instruments of communication and not simply compliance documents,” said Hans Hoogervorst, chairman of the International Accounting Standards Board, which sets accounting rules for more than 100 countries. “These proposals are designed to help change behavior, by emphasizing the importance of understandability, comparability and clarity in presenting financial reports.”

The move is part of a global effort to make financial statements easier to read. In a survey last year, the IASB found that investors and analysts felt companies could better communicate the most relevant issues in financial statements, rather than forcing them to sift through vast amounts of data.

The IASB’s proposal suggested amendments that would require companies to assess whether particular disclosures are material to investors and to think closely about whether their presentation makes it harder for investors to find the most important information. The board also proposed that companies emphasize clarity and comparability in their financial statement footnotes.

U.S. accounting rule makers have also been working on a disclosure frameworksince 2009. Earlier this month, the Financial Accounting Standards Board issued a proposal that suggested improvements to the way companies presentfinancial statement footnotes. The Securities and Exchange Commission is also expected to tackle a “disclosure overload” project this year.

The IASB is accepting public comments on its disclosure framework proposal through July 23.

 

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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