ECIIA says the European Union has put plans to introduce country-by-country accounting disclosures on ice. Instead, it is revising the existing Shareholder Rights Directive in a move that could create new opportunities for internal auditors.
The revised directive establishes specific requirements to encourage shareholder engagement in the long term and increase transparency.
Lucia Žitňanská, Minister for Justice of Slovakia who helped broker the agreement with the EU, said: “The financial crisis revealed that in many cases shareholders supported excessive short-term risk-taking by managers. The revised directive is intended to redress this situation and contribute to the sustainability of companies, which will in turn help generate growth and create jobs. ”
Companies will need to improve the transparency of their reporting in several areas – including directors’ performance and remuneration, shareholder engagement and related-party transactions.
“These will be new areas of disclosure for many and having assurance that companies’ reports are fit for purpose will be key,” Henrik Stein, ECIIA President, says. “Internal auditors are well-placed to provide that support and should work with their organisations to ensure that the processes underpinning those requirements provide accurate and timely information.”
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