By Dave Pelland
With the number of required disclosures increasing, a growing number of companies are taking steps to enhance the effectiveness of their reporting to help investors and regulators understand their strategy and performance more easily.
Preparers and regulators told FEI’s Current Financial Reporting Issues (CFRI) conference that more companies are adapting their disclosures to make them communications documents with key stakeholders, instead of just compliance documents intended to meet regulatory requirements.
“Everybody who's a preparer knows that the volume of disclosures has gotten bigger, but that's not what disclosure effectiveness is about necessarily,” said Loretta Cangialosi, Senior Vice President and Controller of Pfizer, Inc.
“Certainly, redundant information, etc. are things to look at, but I think for preparers right now, we really are at an inflection point on how do we want our financial statements and our MD&A to look and sound? This is not a new area… I think preparers actually can do quite a bit in making the current disclosure regime more effective in the way that we communicate,” Cangialosi said.
Christoph Pereira, Chief Corporate Securities & Finance Counsel, Vice President and General Counsel for Business Innovations of General Electric Company, said his company began examining its disclosure practices following the 2008-9 financial crisis as investors began questioning some of the company’s investment priorities during the downturn.
Over the subsequent years, Pereira said, the company has incorporated more charts and infographics into disclosure documents, including the annual proxy statement, to update stakeholders about GE’s performance and strategic priorities.
“The audience is not just investors” Pereira said. “The audience is also your board of directors and employees and suppliers and customers, especially a company like GE, that's quite complex. It's really the one document that holds the company together.”
Similarly, Leonard Gatti, Vice President, Financial Reporting for Comcast Corp., said his company has been working to streamline its financial reporting processes and documents to make them easier to read and more relevant to end users.
“The bottom line is we’re a relatively simple business and our thought is the financial...