united nations crafts global reporting standard 
16 July 2008

The United Nations’ global reporting initiative and the big four world accounting firms are working towards a standard “holistic” reporting system for companies to report additionally on non financial matters, the author of The King report on corporate governance, Prof Mervyn King.

King said the new standard had been discussed in a meeting he had with Sir David Tweedy, the chairman of the international standards accountancy board and chairman of the global reporting initiative. The aim is to align international company reporting systems to achieve one standard of “holistic reporting” so that readers of annual financial statements could make “more informed assessments”.  He told the conference of the international society of business, economics and ethics that the new standard would be ready in about 10 years . A technical sub committee had already been formed and that there was general acceptance among the big four accountancy firms, PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young, and KPMG, that merely reporting in terms of current international accounting standards, “doesn’t tell the whole story and that is the reality”.

Also a new company reporting standards would reflect items from the “triple bottom line” such as social aspects, environmental aspects and financial information.  Asked what steps were being done to ensure that small and medium-size enterprises (SMMEs) also follow good corporate governance, he said large multinationals, in order to make their businesses sustainable, were taking measures to ensure their suppliers followed such practices.

In the case of Proctor & Gamble, one of the world’s largest corporations which spent $25bn with SMME suppliers, the company provided carbon credits for their suppliers to perform responsibly, “otherwise they will stop using them as suppliers”.  King said there was also a realisation among small and medium-sized businesses that short-term opportunistic gains, at the expense of those around them in their communities, was “not acceptable in society”.  “So there is another impact and force being applied on SMMEs to act as decent corporate citizens, and I am a great believer in that.” He said that legislating to achieve that aim was the answer.

Chris van Gass,   www.businessday.co.za