Financial reporting framework set

In response to President Arroyo’s call for full disclosure and more transparency in the country’s capital market, the Securities and Exchange Commission (SEC) will soon launch a new framework for a uniform financial reporting based on international norms.

SEC Chairwoman Lilia Bautista said these standards would enhance the quality of information submitted by the players in the capital market – the equities and debt markets – and at the same time improve the efficiency and effectiveness of the corporate regulator in supervising the non-bank financial sector.

Earlier this month, an umbrella group of seven associations in the capital market raised before President Arroyo several industry concerns. One of the most immediately actionable measures which involves the promotion of the full disclosure and transparency rule in the market in order to enhance investor protection and raise confidence.

"In this regard, we would like to advance to the SEC the adoption of uniform disclosure standards, particularly in relation to accounting practices, reportorial format, and ownership structure," the industry group said.

President Arroyo, in turn, backed up the proposals which form a critical aspect in the wide-ranging set of bold economic initiatives of the present administration.

The SEC said the inadequate quality of information available to investors has been blamed for the proliferation of various investment scams such as pyramiding and multi-level marketing.

Bautista said the SEC would help the market players adopt the global standards using information technology (IT) by setting up an IT-driven monitoring device (MoDe) that will send "yellow signals" to the regulator, analysts, investors and others who would want to assess the financial health of a company or market sector being regulated by the SEC.

The MoDe will enable the SEC to fasttrack its vision for the capital markets to pro-actively adhere to international standards. She added that of the 34 global accounting standards that are in current practice by prudential regulators worldwide, 11 have been adopted in the Philippines and 10 more are in the process of being adopted.

Moreover, Bautista said the SEC will work with the Bangko Sentral, Bureau of Internal Revenue, Board of Accountancy, and the Professional Regulation Commission, as well as other regulators and professional associations in attaining a high quality and independent audit environment. – Conrado Diaz Jr.