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Less is Sometimes More

ISCA CEO, Mr Lee Fook Chiew, was quoted in The Business Times on the question of "Will the move to scrap quarterly reporting lead to a decrease in corporate transparency?" This is what he has to share:

A higher frequency of reporting may not always improve transparency especially as quarterly announcements are usually not audited. Reporting frequency should be driven by stakeholder needs and the nature of the business instead of compliance requirements. For example, REITs that issue quarterly dividends may have a good rationale to provide quarterly reports.

Companies should assess the pros and cons of quarterly reporting. A possible downside of more frequent reporting is that management may be more inclined to make short-term decisions to present favourable interim results at the expense of long-term strategies. Where quarterly reporting provides little value, resources can be better deployed to enhancing critical areas of financial reporting, such as impairment or fair value assessments. 

The additional disclosure requirements by SGX in higher risk areas like rights issues and interested person transactions will also help maintain transparency. Companies adopting half yearly reporting should have robust reporting processes and it would also be good practice to obtain assurance for the half-year report.

- Lee Fook Chiew, Chief Executive Officer, Institute of Singapore Chartered Accountants (ISCA)

This article was first published in "Views From the Top" in The Business Times on 27 January 2020.

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