Corporate reporting as a tool for accountability and transparency

The trust deficit has been a huge contributor to the extreme levels of uncertainty that pervade many societies today, and trust remains a critical component of a well-functioning social fabric. Any attempt by organisations to restore this trust will involve communication that relies on various forms of corporate reporting.

The ability to apply corporate reporting in a way that promotes accountability and transparency towards building trust must remain an essential objective for organisations.

The use of financial and non-financial reporting by organisations today should be done with this fundamental understanding of the linkages between reporting and the trust deficit across society.

Accountability for an organisation positions it as an integral member of society that is responsible to stakeholders for its actions and the values driving those actions, while transparency is achieved through open communication with stakeholders.

The adoption of global corporate reporting standards is an important step towards accountability and transparency.

The use of these standards implies that organisations are allowing themselves to be measured or assessed against an expected set of ideals on how they have performed towards meeting the expectations of stakeholders.

It is also very critical to aid understanding of corporate reporting, as stakeholders can apply a familiar and consistent set of rules when evaluating the actions and outcomes provided by organisations.

Another important aspect for organisations to consider, even when applying global reporting standards, is tailoring the disclosures provided to ensure that the information addresses the information needs of stakeholders and provides the unique context of the organisation.

This tailoring of disclosures by organisations is usually the missing link that leads to a reduction in the usefulness and relevance of reports and potentially worsens the trust deficit.

It is not the use of a global reporting standard such as IFRS (International Financial Reporting Standards) by organisations alone that matters, but the deliberate application of these corporate reporting standards that makes the difference, promoting accountability and transparency and ultimately building trust.

The writer is a partner at PricewaterhouseCoopers. He is an author who writes and speaks widely on corporate reporting topics.