The Role of Disclosure in Corporate Governance

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What information should be disclosed :Accounting RecordsThe main criteria to assure appropriate disclosure are asfollows:– Accounting transparency is based on the use of true, accurate and completeinformation for construing entries in the books of accounts.– Each employee shall cooperate in order to have events properly and timelyregistered in the books of accounts.– For each transaction the proper supporting evidence has to be maintained inorder to:• facilitate registration of the accounting;• identify the different degrees of responsibilities;• provide an accurate representation of the transaction so as to avoid any errorsin interpretation of the facts.– Each record shall reflect exactly what is shown by the supporting evidence.– Each employee shall make sure, through accurate filing according to logicalcriteria, that the documentation can be easily traced.– Every employee who becomes aware of any omissions, misrepresentations,negligence in the accounting or in the documents on which accounting isbased, shall bring the facts to the attention of his or her superior.
What information should be disclosed:Other information• The main criteria in order to decide whether information anddata are to be communicated is relevance: all relevant information issubject to disclosure, except from “Company confidential” information,i.e. information that might jeopardize the Company competitivestrategy if revealed.• In order to evaluate the relevance, it is important to analyse eachStakeholder motives, i.e. what kind of stake the Stakeholder holds inthe Company:– For instance, the full disclosure and comprehension of the OrganizationalChart is of the highest relevance for employees, while for minorityshareholders the same information can be just “nice-to-have”.• Furthermore, it is important to fine-tune the degree of disclosureconsistently with strategic priorities:– For example, if the Company wants to obtain the Quality Certification, itmight be smart to disclose the Organizational Chart, including the TotalQuality Managers role and responsibilities.
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The Role of Disclosure in Corporate Governance

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