The Transparency Debate: How Does It Affect Internal Audit?
Richard Chambers, CIA, CGAP, CCSA, CRMA, shares his personal reflections and insights on the internal audit profession.
For years, investors, global regulators, the media, and others have been clamoring for greater transparency in the corporate sector. Following the global financial crisis in 2008, the chorus reached a crescendo. It was argued that lack of corporate transparency (particularly in the financial sector) was a direct factor in the crisis, and that failure to ensure greater transparency in the future would doom the global economy to further disasters. While the message was pretty clear a couple of years ago, today the noise around transparency is becoming a bit more muddled. Some still favor greater transparency, and others think the current requirements are already too great.
The European Financial Advisory Group and the International Financial Reporting Standards Foundation and International Accounting Standards Board are exploring disclosure reform initiatives. A July 2013 report by the CFA Institute argues that while most disclosure reforms focus on reducing the quantity of disclosures, reform should instead focus on improving disclosures.
- More information from management and the board about their assessment of strategies and risks.
- Greater insights on governance and risk management processes.
- More disclosure of key performance indicators.
- More information on environmental and social disclosures, including risk areas such as carbon emissions, water scarcity, political spending, and corporate lobbying.
- Information about the real reasons for executive departures.
- Information on the CEO-to-worker pay ratio.
Posted on Nov 18, 2013 by Richard Chambers
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