Charities press their case to IASB

Publish What You Pay, the coalition behind a campaign to increase the
geographical transparency of company accounts, is pressing for a meeting with
the IASB to push it’s point home.

More than 80 NGOs, including Save The Children, CAFOD and Transparency
International, have formed the coalition to call for the inclusion of a
country-by-country breakdown in the annual reports of companies reporting under
IFRS.

Following comments in last week’s Accountancy Age (page 1) expressing
uncertainty from the International Accounting Standards Board over exactly what
its concerns were, coalition members Richard Murphy and Harry Parham have
requested a meeting with the board to make their feelings clear.

The coalition has also invited the board to visit locations where it
considers geographical disclosure of information would be of significance.

The coalition chose the IASB’s exposure draft 8 on segmental reporting to
highlight the wider issue of how global companies act as corporate citizens in
individual countries.

Currently, the exposure draft proposes a shift in favour of reporting on a
business segment basis, similar to that used in the US.

Murphy, the chartered accountant who wrote the coalition’s main submission,
said: ‘If companies want to be seen as good corporate citizens, then they should
say where they operate, who they operate with, what they do and how much they
get for it.’

Murphy has conceded that publishing this information might not be useful for
individual companies, which already know the information. But he stressed that
the information would be very important to local suppliers, local employees and
independent shareholders who might have their own investment criteria.

The campaign has its roots in the extractive industry transparency
initiative, which called for the greater disclosure of money paid by oil, gas
and mining companies to national governments for the rights to do business in
resource-rich countries.

It could be argued that this process of accountability should be applied to
all companies. However, the ICAEW has argued against this. ‘The purpose of
geographical disclosure, as we see it, is to identify risks such as currency
exposure

or politically influenced trading uncertainties. We do not, therefore, agree
that disclosure should be made for individual countries,’ it said in its
submission to the IASB.

The ICAEW added that, where a business operates in many different countries,
providing the required disclosures for each one is likely to be both confusing
for users and onerous for preparers.

Lisa Harker, a technical partner at PricewaterhouseCoopers, has argued that
the IASB’s exposure draft does allow for geographical reporting. ‘If a company
reports internally by geography, and that information is provided to the chief
operating decision maker, then it would be required to report this externally,’
she said. The major issue of ED8, she added, is to converge the existing
international standard with the US equivalent.

In the meantime, Murphy is awaiting a response from the IASB. ‘We have opened
a dialogue and raised our concerns,’ said Murphy. ‘All change takes time, but
this has been an area that has previously been ignored.’