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Auditors need to provide more info to shareholders
Narrative reports have focused primarily on meeting regulatory demands rather than providing shareholders with essential information on corporate performance.
Deputy Director of Deloitte Viet Nam, Thai Thi Thanh Hai, in a seminar on Apr. 21 on narrative reporting suggested that information in the narrative reports issued by HCM City-listed companies were too general and lacking specific detail.
This shortfall meant that shareholders and investors lacked enough information to make sound decision on their investment strategies into the corporates, Hai said.
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- Disclosure requirements for Vietnamese public companies include:
- Regular reports of the company charter and inner regulation on corporate governance
- Periodical (Month/quarter/annual) reports of business earnings
- Information required by the State Securities Commission
- Trading of major shareholders or corporate founders during the trading limitation period
- Public share offerings and plans to use the mobilised capital/ buying treasury stocks
Regulated information in annual reports:
- Corporate history: Important events, development, future expectations
- Management board report: Annual earnings (Compared to annual target), business prospects
- Directors' report: Financial situation, achievement, future plans
- Financial report: Fact sheet on the year earnings (audited)
- Shareholders and founders information. | Isobel Sharp, Vice President of the Deloitte, said that companies today were trying to serve two clients simultaneously. While they wanted to satisfy their shareholders, they also had to comply fully the disclosure regulations by market regulators.
To simultaneously serve them was a major challenge, Sharp said.
Association of Chartered Certified Accountants (ACCA) director Helen Brand concurred that corporate narrative reports were being questioned even before the financial crisis occurred. The matter was how much information in the narrative reports was really necessary while the reports themselves fully complied with regulatory demands.
Hai pointed out that Vietnamese corporates were short of detailed instructions on the essential information to make narrative reports. "Shareholders themselves are uncertain about their needs from corporate reports, while the cost and time spent on them also affects the quality of the reports."
She noted some points that local enterprises should consider in their making of annual reports, including further information on business strategy and prospects, possible risks or influential factors on business performance, and key performance indicators and corporate governance.
But, most important was the professionals who could theoretically help corporates make narrative reports, said Ha Thi Thu Thanh, Director of Deloitte Viet Nam.
vietnamnews
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