Corporate Disclosure, Audit Committees, Audit in CG

Question 1

What is Corporate Disclousure?

Answer 1

Corporate Disclosure is about communicating relevant information that can influence the investment decisions of stakeholders, particularly investors and regulators.

Question 2

What constitutes ‘relevant information’ in corporate disclosure?

Answer 2

• As per IFRS definitions, information must be capable of influencing user decisions and should represent the substance of underlying events faithfully.
• It includes both advantageous and disadvantageous information, covering everything that may impact decisions regarding business operations in the short or long term.

Question 3

What are the benefits of corporate disclosure?

Answer 3

• Reduces information a
• Enhances transparency
• Acts as managerial tool to build investor/ market trust
• Meets regulatory requirements

Question 4

What are the forms of corporate disclosure?

Answer 4

• Mandatory: Legal obligations to disclose, such as financial statements, risk reports, and directors’ reports.
• Voluntary: Additional disclosures like management forecasts and press releases

Question 5

How have corporate disclosure requirements changed over time?

Answer 5

• Expansion from basic framework to include detailed audits and ESG/ climate risk reporting.
• Regulatory Frameworks e.g. The EU’s NRFD and CSRD, the UK’s TCFD requirements.

Question 6

What are Audit Committees?

Answer 6

Audit Committees are a crucial component of corporate governance, tasked with overseeing financial reporting and disclosure quality.

Question 7

Key responsibilities of Audit Committees?

Answer 7

• Oversight of financial reporting process
• Selection and supervision of independent auditors
• Assurance of audit quality and internal audit functions

Question 8

What are audit disclosures?

Answer 8

Include detailed insights into the preparation and complexities of financial statements.

Question 9

Types of audit disclosures?

Answer 9

• Quantitative: Such as disaggregated financial data.
• Qualitative: Including significant accounting policies and discussions on critical judgements

Question 10

Example of Audit failure?

Answer 10

Long-term cozy relationships with auditors like KPMG and advisory services by EY, Lazard, and Morgan Stanley played roles in oversight failures.