CIMA Sri Lanka recently held a focus group discussion among industry leaders to discuss the way forward for corporate reporting in Sri Lanka.

The discussion was conducted to support a global project under-taken by CIMA together with PricewaterhouseCoopers LLP and Tomorrow's Company to explore what changes are needed to make corporate reporting fit for purpose for the future. The ultimate purpose of this project is to advocate change to produce more comprehensive and comprehensible corporate reports in future.

The discussion created a lively debate among the participants about their perceptions of corporate reporting, its strengths and weaknesses, what hinders the progress of corporate reporting, and what can be done to enhance its relevance to investor community.

Few of the key themes that came out of this discussion as the way forward for better corporate reporting are elaborated below.

·  Currently the financial journalism is weak in Sri Lanka. Therefore, the role played by financial journalists should be improved and enhanced to encourage analytical writing that supports investors.

·  Analysts and stock-brokers should take a long-term view of performance instead of limiting its focus to short-term/quarterly results which may vary significantly due to seasonal factors.

·  There should be more guidelines on risk reporting. Companies should be encouraged to report on specific risks - unique and relevant to its business instead of confining itself to reporting on generic details about risk management.

·  The understanding and appreciation of corporate reporting and adherence to relevant accounting standards should be broad-based to include non-financial professionals and leaders in other disciplines.

·  The governance measures/efforts and communications provided by regulators such as the Colombo Stock Exchange, Securities Exchange Commission, Sri Lanka Accounting and Auditing Standards Monitoring Board should be better steam-lined to maintain consistency and simplicity.

·  Business leaders should govern themselves with better ethos in earnings management, and maintaining transparency of incentives.

·  Sri Lanka should move towards a more principle based reporting structure as opposed to boilerplate reports that present very little meaning.

·  Local research should be encouraged on the sphere of corporate reporting including risk reporting.