CA Sri Lanka insights on flagship Annual Report Awards

Monday, 9 December 2013 00:00 -     - {{hitsCtrl.values.hits}}

The ceremony of the 49th Annual Report Awards Competition organised by the Chartered Accountants of Sri Lanka will be held tomorrow, 10 December, at 6:30 p.m. at Waters Edge Battaramulla. Following are excerpts from an interview with CA Sri Lanka President Sujeewa Rajapaksa and Annual Report Awards Organising Committee Chairman Tishan Subasinghe on the popular competition and CA Sri Lanka’s flagship event Q: What is the significance of an annual report and how does it contribute to the long-term economic development of a country? A: The Annual Report is the single most important disclosure of an organisation’s performance. An annual report is today considered a strong communication tool that facilitates the decision-making process of an increasingly diverse group of stakeholders by establishing credibility and transparency through financial reporting. At a juncture when Sri Lanka is poised to make significant economic advancements, an annual report produced by a corporate can be an important contributing factor in Sri Lanka’s development oriented journey. An annual report not only promotes transparency and good governance within an organisation, but it also contributes significantly in terms of capital market development and also gives that much-needed leverage for a foreign investor to make an informed decision on whether to invest in Sri Lanka or not, thereby significantly impacting our nation’s economic development. Q: The Annual Report Awards competition is today a well-recognised event in the corporate world and this will be the 49th event. What made the institute continue this event for so long? A: Transparency and good governance will always be of primary importance both in the public sector or the private sector. An annual report is required to make certain mandatory disclosers so that it gives a true and fair view of the organisation to its readers and there are certain disclosure made by organisations voluntarily which are of significance to its stakeholders. We realised the importance of recognising excellence in annual reporting there by promoting transparency; this is how the Annual Report Awards competition came into existence 49 years back. Over the years, the competition has set high standards among organisations in line with global standards which promote transparency, corporate governance and excellence in financial reporting. In the recent years, we have also seen a remarkable improvement in company disclosures in comparison to several years back, and I believe the competition is one reason for such improved disclosure by organisations, both small and large. Q: Could you elaborate on the national role played by CA Sri Lanka? A: The Institute of Chartered Accountants of Sri Lanka is the national body of accountants which was incorporated by an Act of Parliament in 1959. We play an important and responsible statutory role, apart from being the only accredited authority that formulates accounting and auditing standards in Sri Lanka. Therefore we are primarily tasked with ensuring that there is a robust and sound financial landscape in place. A part of this comes from promulgating globally recognised accounting and auditing standards and seeing that those standards are pertinent in the current context and are also adopted by all companies. Furthermore, in our capacity as the national body of accountants, the institute continuously and consistently fosters the knowledge of all professionals and aspiring professionals in the accounting and finance fields. Our institute plays an important role in ensuring Sri Lanka enjoys the same status as any other country abroad. We also share a close relationship with the Government of Sri Lanka, apart from our representation in several important regulatory authorities. At present we have 4,300 members, which makes us one of the largest professionals’ bodies. We are also among the largest tertiary education providers outside the university system with over 41,000 students who are studying chartered accountancy. Q: Could you elaborate on the aim of this event and also on this year’s theme, ‘One Destination – Towards Integrated Reporting’? A: As I mentioned earlier, the primary aim of this competition is to reward excellence in annual reporting. However, I must mention that what we look for is disclosure and not the actual financial performance of the respective organisations. There are several important areas which we expect companies to cover in their annual report, this includes effective communication to stakeholders through the publication of informative annual reports, effective presentation of financial and non-financial information and most importantly complying with legislative requirements and generally accepted accounting practices. The competition is also a platform which encourages organisations to meet the global expectations, including focusing on the organisation and its values, achievements and contribution to society rather than indicating the financial results of an organisation alone. We also believe it is important for companies to go beyond providing statutory disclosures and instead present a holistic view of an organisation’s performance covering transparency in operations, good governance, sustainability and social responsibility. As always, the competition is annually held under a specific theme, this year too we have come up with a timely theme focusing on Integrated Reporting. The Integrated Reporting initiative was introduced to the world by the Integrated Reporting Council. As per the draft framework, integrated reporting aims to provide a concise communication about how an organisation’s strategy, governance, performance and prospects in the context of its external environment lead to the creation of value over short, medium and long terms. This year’s competition aptly demonstrates our thought leadership in promoting integrated reporting in Sri Lanka, while ensuring our quest to drive the profession in the right direction, hence the very inspiring theme ‘One Destination – Towards Integrated Reporting.’ Therefore, in line with this year’s theme, each report will be scrutinised for additional information that will make it stand out from the rest. Q: What is the overall structure of this award competition? A: The competition is open to any organisation that produces an Annual Report, from multinational companies to small time community groups. A total of 23 special categories of awards will be presented to the winner, and two runners up respectively at a grand finale which is scheduled to be held in December 2013. This year, the judging panel will scrutinise for any additional information that can be provided by the participating company. Along with this year’s theme, each organisation’s resources and the scale, complexity and sophistication of its operations will be considered in the judging process along with creativity and colour of the actual report. Entrants for Corporate Governance, Management Commentary and Corporate Social Responsibility Awards will be evaluated by a panel of specialists against a separate marking scheme. The judges essentially evaluate the extent to which readers or stakeholders can make informed decisions about the organisation based on the annual report. Q: What are the benefits that the corporate sector gains by participating in this competition? A: The corporate sector has and will continue to enjoy vast benefits through this competition. Apart from it being an important platform which aspires to raise awareness on improving the quality of annual reporting amongst companies in Sri Lanka, the Annual Report Awards also gives instant recognition and credibility to a company’s operations. The Annual Report Awards have also been instrumental in inculcating financial reporting discipline in the corporate sector, thereby making these companies competitive in a global context. Areas highlighted in the competition such as mandatory and voluntary disclosures reflect the organisation’s commitment to transparency, enhanced governance and demonstrate in detail how the organisation engages with all its stakeholders. Further, the awards also provide a holistic view of an organisation’s performance. By qualifying and quantifying the company’s performance, stakeholders get a deep insight into the company’s operations. Q: Could you elaborate on the marking process adopted for the annual report awards competition? A: The annual reports are evaluated against established criteria and do not include the actual financial position or the actual financial or non-financial performance of an organisation. The winners are selected based on their ability to effectively communicate organisational objectives, highlight performance, and ensure transparency and good governance. After an initial selection process conducted by a panel of judges, shortlisted contestants will undergo an intense technical review. The overall winners will be selected by the final panel of judges following an intensive screening process. They will be selected purely on merit, irrespective of their industry sector. Q: Can you tell us about last year’s event, including the participation and its achievements? A: In December 2012, CA Sri Lanka held its 48th Annual Report Awards Award competition grand finale at the Water’s Edge, with the participation of 124 organisations which registered for the event. The competition was held under the theme ‘Looking Beyond Regulatory Reporting’. John Keells Holdings PLC was adjudged the winner of the Cyril Gardiner Memorial Trophy for Overall Excellence in Annual Financial Reporting for 2012, followed by Hatton National Bank PLC and Union Assurance PLC, which were adjudged the joint winners of the Corporate Governance Disclosure Award. Diesel & Motor Engineering PLC won the Corporate Social Responsibility Reporting Award, while Sampath Bank PLC won the Management Commentary Award. Contd. on Page 17 CA Sri Lanka... Contd. from Page 9 This year the number of registrations has increased to 126, the highest number of registrations in the event’s 49-year-old history. The companies registered represent diverse sectors across the country. Q: What is the procedure to participate in this competition and when will the grand finale be held? A: Any organisation that produces an annual report can participant in this competition. We have identified 23 categories under which awards will be presented. The grand finale of the competition will be held on 10 December at Water’s Edge, Battaramulla and we expect participation of around 700 guests consisting of top corporate leaders and other high-ranking officials from leading organisations in the country at the grand finale. Q: Have there been any additional sectors added to this year’s competition, in comparison to previous years? A: In the past we identified 22 sectors for the competition, however from this year onwards, having understood the importance and role of the Small and Medium Sized Entities (SMEs), we had added a special SME category in the competition, giving them the opportunity to benchmark themselves amongst others in the respective industries. Q: What sort of international exposure do the winners of the Annual Report Awards competition enjoy? A: The main winners of the competition are eligible to participate in the Best Presented Annual Report Awards organised by the South Asian Federation of Accountants, thereby providing Sri Lankan companies the unique opportunity to benchmark themselves with their counterparts in the South Asian region. Q: As the President of CA Sri Lanka, what would you like to convey to the corporate world? A: Participation in this competition would be a testament to a company’s dedication towards excellence in annual reporting and ensuring transparency. The marking process is carried out at several rounds and over 100 chartered accountants and industry experts are involved in the marking process, which is conducted under the supervision of our technical division. I take this opportunity to invite organisations to be a part of this competition because this will not only assist individual organisations but also helps transform the country’s corporate sector, thereby enjoying the perks of improved transparency and accountability, which ultimately helps the country’s economic development.