Annual Report - A means for Corporate Governance and Transparency

The publication of timely annual report which fulfils the requirement of Companies Ordinance is an important tool for promoting accountability and transparency in the Corporate Reporting. Of course transparency is important only when shareholders are diverse and widespread ie in listed entities. Detailed information is not expected from closely held or family owned companies. The last decade has witnessed the financial disclosures increasingly getting improved through international accounting standards and IFRSs to achieve the transparency desired by the stakeholder
For the last 11 years the Joint Committee of ICAP and ICMAP has been organising the Best Annual Repot Competition with the objectives:
-- to encourage and give recognition to excellence in annual corporate reporting; and
-- to promote corporate accountability and transparency through the publication of:
-- timely
-- factual information; and
-- reader friendly information
It is interesting to note that there although there is no specific law requiring an entity to produce and publish annual report, however, there are various statutes that require the contents embodied in it. According to the International Standard on Auditing 720 the Annual Report is defined as "An entity ordinarily issues on an annual basis a document which includes its audited financial statements together with the auditor's report thereon. This document is frequently referred to as the "annual report".
In order to encourage transparency and relevant reporting from companies through additional disclosures, ICAP and ICMAP launched the Best Corporate Reporting Awards. The awards are given to companies as an acknowledgement for voluntarily providing relevant and timely information to the stakeholders to help them make economic decisions. An elaborate 'Criteria' which has evolved over the years, is used as a basis to evaluate best reports. It is pertinent to note here that the 'Criteria' not only comprises of mandatory requirement of Companies Ordinance 1984, and the code of corporate governance, it also encourages adopting international best practices. The criteria for 2011includes certain information in addition to the disclosures required by corporate laws in practice, such as:
Ref. Criteria
1.0 Vision, Mission, strategic objectives, values and code of conduct or ethical principles
2.0 Disclosures of information required by the IFAC Management Commentary
2.1 Description of nature of business including a macro-level (eg industry, main markets, and legal environment) and a micro-level (eg business model, product portfolio) discussion.
2.2 Explanation of management's objectives and its strategies for meeting those objectives including priorities for action and addressing threats and opportunities of market trends.
2.3 Description of the entity's most significant:
2.4 Resources, including an analysis of liquidity, cash flows, financing arrangements, human capital and capital structure, including any inadequacies in the capital structure and plans to address such inadequacies;
a) Risks, including strategic, commercial operational and financial risks; and
b) Relationships, which are likely to affect performance and value of the entity
c) Description of the entity's financial and non-financial performance (results) and the future prospects, including whether the performance may be indicative of the future performance.
d) Description of critical performance measures and indicators which management uses to measure performance of the entity against stated objectives of the entity and whether the indicators used currently will continue to be relevant in the future.
2.6 Market share information preferably from an independent source
4.2 Summary of the Cash Flow Statement for 6 years
4.4 Vertical and Horizontal analysis of Balance Sheet and Profit and Loss Account for 6 years
4.5 Statement of Value Added and how distributed
4.6 Investors' Relations section on the corporate website
5.4 Comprehensiveness of corporate information
5.6 Definition and glossary of terms / Calendar of major events during the year
6.3 Board structure and its committees
6.4 Chairman of the Board other than the CEO
6.5 Information on other Board Committees, their terms of reference and the number of meetings
6.6 Salient features of the Audit Committee Charter/Terms of Reference
6.7 Name of independent directors / non-executive directors
6.8 Profile of each director including engagement in other entities
6.9 Non- executive directors on the Audit Committee
6.10 Organisation Chart
6.11 Disclosure of criteria to evaluate Board's performance
6.12 CEO performance review
Way forward
In order to be more transparent following disclosures are suggested in the IFRC Practice Statement on Management commentary issued by the International Accounting Standards Board (IASB) which is the independent standard-setting body of the IFRS Foundation:
Discussion on likelihood of continuing strategies adopted by the company and estimated results in future.
Discussion on the company's ability to sustain and maintain the most important resources available to company and company's strategy on how to generate resources in future.
Discussion on how the relationships with the stakeholders are managed and strengthened.
Plans and strategies of how to mitigate material risks and uncertainties and negative consequences and potential opportunities related to material risks. Management's assessment of entity's prospects and analysis of the managements' objectives and strategies with the entity's results.
Comparison of current performance with prior periods to help understand the extent to which past performance may be indicative of the future prospects. Explanation of why and how past performance differs with current performance, and of any change in the relevance of performance measurement indicators.
Forward looking information when it is aware of trends, uncertainties or other factors that might affect the entity's liquidity, capital resources, revenues and results. To promote responsible reporting by companies, the joint committee of ICAP and ICMAP is proud to announce the launching of the Best Sustainability Report 2010. This award will bring new era in the eve of corporate reporting in Pakistan.I believe that this initiative will encourage the corporate world to focus beyond single bottom line financial performance to triple bottom line economic, environmental and social performance.The Criteria of these award are based on internationally recognised Framework; G31 Guidelines of Global Reporting Initiative (GRI), an international standard on Sustainability Reporting which has also been recommended by the International Federation of Accountants.

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ICAP & ICMAP JOINT COMMITTEE

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Mr  Muhammad Rafi                                  Chairman

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Mr  Masud Muzaffar                                   Member

Mr  Ahmad Saeed                                      Member

Mr  Ayub Khan Tarin                                  Member

Mr  Abdul Rahim Suriya                               Member

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ICAP & ICMAP EVALUATION COMMITTEE

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Mr  Abdul Rahim Suriya                             Chairman

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Mr  Aftab Q. Munshi                                  Member

Mr  Ahsan Ghaffar Mehanti                            Member

Mr  Fazal Ahmed                                      Member

Ms  Hena Irfan Ahmed                                 Member

Mr  Khurram Jameel                                   Member

Mr  Masoud Ali Khan                                  Member

Mr  Muhammad Farid Alam                              Member

Mr  Mushtaq A. Madraswala                            Member

Mr  Naresh Kumar                                     Member

Mr  Naveed Abdul Hameed                              Member

Mr  Omar Mustafa Ansari                              Member

Syed Fahim-ul-Hasan                                  Member

Mr  Wasif Khalid                                     Member

Mr  Zafar Iqbal Sobani                               Member

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Alphabetical List of Winners of Best Corporate Report Awards - 2010

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Abbott Laboratories (Pakistan) Limited

Al-Ghazi Tractors Limited

Allied Bank Limited

Arif Habib Securities Ltd.

Askari Bank Limited

Atlas Insurance Company Limited

Century Paper & Board Mills Limited

Crescent Steel & Allied Proudcts Ltd.

Engro Polymer & Chemicals Ltd.

Fauji Fertiliser Company Limited

Faysal Bank Limited

First Habib Modaraba

Gul Ahmed Textile Mills Limited

ICI Pakistan Limited

IGI Insurance Limited

International Industries Ltd.

Kohinoor Textile Mills Limited

MCB Bank Limited

New Jubilee Insurance Company Limited

Oil & Gas Development Company Limited

Packages Limited

Pakistan Cables Limited

Pakistan Oilfields Limited

Pakistan Petroleum Limited

Pakistan State Oil Company Limited

Pakistan Tobacco Company Limited

RafhanMaize Products Co Ltd.

sanofi-aventis Pakistan Ltd.

Security Papers Limited

Siemens (Pakistan) Engineering Company Limited

Sui Northern Gas Pipelines Limited

United Bank Limited

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Atlas Honda Limited

Attock Refinery Limited

Engro Corporation Limited

Engro Polymer & Chemicals Ltd.

ICI Pakistan Limited

Millat Tractors Limited

Security Papers Limited

Siemens (Pakistan) Engineering Company Limited

Tetra Pak Pakistan Limited

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