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SAICA criticises ‘ballooning’ annual reports

By Steffen Müller

The South African Institute of Chartered Accountants (SAICA) has called on companies to provide less, but more relevant financial information to their stakeholders and has welcomed the International Accounting Standards Board (IASB) disclosure initiative.

The Institute proposed to reduce the annual reports' size in order to use them as "instruments of communication, and not simply
compliance documents."

International Accounting Standards Board (IASB) chairman Hans Hoogervorst commented: "Many preparers will err on the side of caution and throw everything into the disclosures. They do not want to risk being asked by the regulator to restate their financials."

"Sometimes it is just easier to follow a checklist, rather than put in the effort to make the information more helpful and understandable," he continued.

The IASB has identified a series of factors leading to disclosures issues. These include not applying materiality, the checklist mentality, unclear standards, regulators or users asking for more information, legal and institutional barriers, lack of time and resources to consider and use judgment for what could be left out/restructured, and lack of communication between preparers and their users.

To counter these challenges, the IASB launched the disclosure initiative, a package of several projects aimed at improving the disclosure of financial information.

SAICA project director of financial reporting Sue Ludolph welcomed the initiative saying it will address these issues by "increasing the use of digital reporting, amending presentation and disclosure requirements and by further research into the principles of disclosures and thereafter by reviewing the disclosure requirements of existing standards".

Related links

SAICA
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