BusinessCorporate FinanceCompliance-driven reporting ‘won’t prevent corporate crises’ – Van der Stede

Compliance-driven reporting 'won't prevent corporate crises' – Van der Stede

CIMA professor's lecture called for meaningful communication in financial reports

REPORTING should remain rules- rather than principles-based because more regulation will fail to prevent further economic crises, warned a CIMA professor.

Wim Van der Stede, professor of accounting and financial management at the London School of Economics, told 130 delegates at a CIMA lecture that businesses should use financial reporting to convey a deeper understanding of their ethos and governance.

He said that comply-or-explain frameworks are “superior to rigid mandatory compliance-based regimes”, though warned that companies could still plump for the easier and cheaper ‘comply’ option. On this basis, he suggested ‘explain-and-demonstrate’ is a better approach.

“In line with this, companies would explain and demonstrate how their risk and governance practices are effective and shaped for real use rather than mostly comply through boilerplate reporting,” he added.

 

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