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HSBC chief accountant critical of quality of risk reporting

COMPANIES ARE FAILING to disclose and analyse risk properly, according to a senior accountant at HSBC.

Russell Picot, group chief accounting officer at HSBC, criticised the quality of the risk analysis that companies publish as being “weak” in a report on the future of corporate reporting published by KPMG.

“You get a long description and a lot of numbers, but I think there are not many good examples of disclosures showing how a company has responded to changing risks and its use of relevant metrics,” he said.

One of many influential figures in the world of corporate reporting and accounting standards featuring in the report, Picot argued the current reporting model for all industries, not just financial services, is in need of improvement.

“In most cases, ticking the compliance box is something that financial reports do extremely well, but they are not conveying information in a clear and concise way,” Picot said.

Picot also expects to see the evolution of a dual reporting structure: one document that is driven by the need to comply with regulations and an alternative shareholder document that is shorter than the compliance-driven report.

The latter would be the one that deals with, among other things, strategic, environmental, social and governance issues. This second report would be less constrained by the regulations governing financial statements.

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