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 News | August 21, 2008 |
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ASX warns on risk disclosures
LISTED COMPANIES’ adoption of the revised risk management disclosure regime is relatively low compared with other requirements in the Australian Securities Exchange’s corporate governance best practices, according to an ASX study of 2007 annual reports.
The ASX Corporate Governance Council found the vast majority of listed companies reported they had established policies on risk oversight and management, but only 63 per cent had given any details of their risk management policies and internal control systems.
The Council also found that reporting levels for recommendation 7.2 – which requires the CEO and CFO to certify to the board that their financial statements are based on a “sound system of risk management and internal compliance and control” – were “comparatively low”, on 77 per cent for listed companies and 83 per cent for listed trusts.
“ASX reminds entities that Principle 7 in the Revised Principles has been substantially rewritten and of the need for improved disclosure in relation to risk management policies,” the ASX notes in its Analysis of Corporate Governance Disclosures for 2007 released this week.
“ASX considers that some entities will need to review their reporting in relation to Principle 7 when making the transition to reporting against the Revised Principles, particularly in view of Council’s restructuring of Principle 7.”
The revised Corporate Governance Principles and Recommendations also urge disclosure of material non-financial risks.
So far, just 15 per cent of listed companies had reported on a wider range of risks in their annual reports. The top four of these risks reported on were compliance (70 per cent), financial reporting (65 per cent), operational (64 per cent) and environmental (54 per cent).
The revised Corporate Governance Principles and Recommendations were released in August 2007 and came into effect from 1 January this year, with companies required to adopt the new principles by the end of the following financial year for that organisation.
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20 June 2008
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