Companies can't hide behind the numbers
Hiding information because it is commercially sensitive is no longer an excuse
Claiming information is commercially sensitive is no longer a reason for
keeping it private. That’s the clear warning from the financial reporting
watchdog this week in a clear message to the markets that transparency remains
paramount.
The warning comes after the Financial Reporting Review Panel sanctioned the
AIM-listed company Supercart for preventing information from going public as it
was commercially dangerous for it to do so. The shopping trolley maker breached
the rules under IFRS8 on segmental reporting.
The fear is, of course, that the “commercially sensitive” banner is used to
keep all manner of bad news under wraps. IFRS8 demands that whatever information
key decision makers use to develop strategy within a company should be made
available externally. International standards are designed to explain the
performance of a company through the eyes of management.
This is absolutely right. If executives are to be held to account, full
disclosure is necessary. Executives would be naïve to believe that in the wake
of a crisis that has prompted so much concern about regulation and transparency
they could get away with trying to conceal bad news.
But data, or financial information, is not necessarily the sensitive stuff.
The objective numbers are, in most senses, the tools by which decisions are
made. It’s the way numbers are used and interpreted that is really sensitive.
It’s also the area in which top executives make all the difference. Otherwise
with a given set of numbers, anyone could run a business.
Further reading
Watchdog to bite on
‘sensitive’ data
