Archive for November, 2014

Disclosure committees and IR

November 24, 2014

With ever-growing regulatory requirements and the complexity of global business, disclosure committees are playing a crucial role in ensuring accurate and useful reporting to investors, according to “Unlocking the Potential of Disclosure Committees,” a new report by the Financial Executives Research Foundation and Ernst & Young LLP.

And investor relations officers – in most companies – play an important role with the disclosure committee.

In more than 100 companies surveyed, some 65% of disclosure committees included the head of investor relations as a member – along with the controller or chief accounting officer, general counsel or equivalent, CFO and assorted other executives (usually not the CEO).

The study says having multiple functions represented in addition to finance and accounting – such as general counsels, heads of communications and IROs – adds value because diversity brings to the table insights on the business from multiple points of view:

“It’s a cross between finance and non-finance,” said one of the executives, a senior director of corporate accounting and reporting. So it’s important, she continued, to “make sure the right representation of the business is there … I think we have pretty good coverage.”

As a non-accountant and occasional participant in disclosure committees, I try to ask big-picture questions and challenge insiders to explain the business more clearly … because what investors need most from disclosure is clarity and perspective.