by François Masquelier, Head of Corporate Finance and Treasury, RTL Group, and Honorary Chairman of the European Association of Corporate Treasurers
Everybody agrees that the current ‘corporate reporting’ model will have to change if it is to continue to be useful and usable by stakeholders, particularly if it is to meet their needs and the new regulations, especially European regulations. A more apt system would make the financial markets and the capital markets more efficient, but it would also restore investors’ rather shaken confidence. Transparency and comprehensiveness are needed. The societal responsibility dimension must be taken into account and integrated fully into financial reports. A trend towards a single, more forward-looking, integrated report (i.e., ‘one report’), which would cover all data, is emerging and gaining traction, ready to be imposed on us one day.
The financial crisis, exposing weaknesses
The financial crisis has shown up the lack of business guidelines, prudential standards, abuses and ways of getting round existing standards. The rules are sometimes there but unworkable, ineffective or even worse, unsupervised. The world of finance cannot exist without a set of robust accounting standards (e.g., IFRS) and financial reports that provide transparency, comparability and quality. An annual report is of no value unless it is complete and unique. Hunting through various reports for information is never a pleasant exercise for users. The approach used by annual reports has an uncanny similarity to an exercise which consists of ticking the boxes required for compliance. Surely form is prevailing over substance? Does this type of report present data concisely? Does it deliver the desired messages?