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Quality of Corporate Disclosure in Various Sectors

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The quality of corporate disclosure in various sectors, including state-owned enterprises (SOEs), listed companies, financial institutions, and insurance companies, has been a subject of concern. A recent report highlights several common issues with compliance with International Financial Reporting Standards (IFRS) and filing requirements across all sectors.

Gaps between Legislative Requirements and Practice

The report suggests significant gaps between applicable legislative requirements and financial reporting practices across all sectors.

Banking and Microfinance Sector Performs Better

The banking and microfinance sector appears to have better compliance with IFRS compared to other sectors reviewed.

Common Issues with Non-Compliance

Common issues identified include:

  • Poor organization and flow of financial statements: This makes it difficult for stakeholders to understand the company’s financial position.
  • Omission of disclosure of significant judgments in applying accounting policies: This can lead to a lack of transparency and accountability.
  • Omission or generic disclosure of key measurement assumptions: This can result in inconsistent financial reporting.
  • Poor disclosure of events after the reporting period (e.g., effect of COVID-19): This can make it challenging for stakeholders to understand the company’s response to significant events.
  • Depreciation policies are boilerplate and often inconsistent with IFRS requirements: This can lead to inaccurate financial reporting.

Sector-Specific Compliance Issues

The report highlights sector-specific compliance issues, including:

State-Owned Enterprises (SOEs)

All financial statements reviewed likely did not comply with at least some aspects of IFRS in key areas.

Listed Companies

Common issues include incomplete disclosures of impairment of non-financial assets and possibly deficient financial asset impairment testing.

Financial Institutions

Deficiencies in disclosures about business models and financial instrument risk management were identified.

Insurance Companies

Both reviewed insurance companies likely did not comply with at least some aspects of IFRS in key areas.

Next Steps

The report suggests considering follow-up steps, such as workshops, to address the identified issues. To provide a more comprehensive analysis, it would be helpful to have access to the full report or additional context related to the specific requirements and regulations governing corporate disclosure in these sectors.