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Disclosure and Transparency Frameworks

HB 4052004

HB 4052004

Handbook
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Disclosure and Transparency Frameworks

First published as HB 4052004.

COPYRIGHT
Standards Australia International All rights are reserved. No part of this work may be reproduced or copied in any form or by any means, electronic or mechanical, including photocopying, without the written permission of the publisher. Published by Standards Australia International Ltd GPO Box 5420, Sydney, NSW 2001, Australia
ISBN 0 7337 5935 1

HB 4052004

Preface
This Handbook was prepared by Standards Australia Committee MB-004, Business Governance. The demand for disclosure and transparency as a key component of corporate governance is global. The United Kingdom Audit Commission (UKAC) observes that well-governed organisations demonstrate a number of key soft characteristics, which include: (a) A culture based on openness and integrity in which decisions can be challenged and accountability is clear. An outwardly focused perspective, with clear communication and dialogue between decision makers and service users and the public.

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(b)

UKAC emphasises that transparent, high quality decision making, including the known basis on which information is accepted or disregarded, coupled with effective scrutiny and challenge is the output of good governance. The Chartered Institute of Management Accountants for England and Wales (CIMA) has strongly advocated the benefits of disclosure and transparency. CIMA advocates more transparency in financial reporting. They explain that this essentially means that organisations would start providing all the information the market considers relevant, rather than limiting this to meeting regulatory requirements. Transparency in this context means that there should be little difference between the performance measures used internally and those reported to external stakeholders. Similar sentiments abound locally, spurred by major corporate collapses in Australia. The problems do not reside only in the private sector. The public sector has also witnessed problems that reflect on corporate governance. The Public Accounts Committee of the NSW Parliament highlighted a range of governance failings in their 2001 examination of a significant public sector entity. Transparency and disclosure has always had special place in the public sector, where taxpayers funds are used. But the Public Bodies Review Committee of the NSW Parliament (2002) expanded this emphasis, stating: openness and transparency in reporting has now assumed even greater importance in the light of the

HB 4052004

greater responsibilities that have been devolved to agencies over recent years and the increasing focus on the issue of good corporate governance in the public sector. It is recognised that disclosure and transparency have two elements: one legal and one ethical. The legal requirements are set out in legislation, regulations and in various guidelines. Transparency should have a strong written justification so that it is less readily subverted. Transparency is one of the fundamental principles in ethics. It underlies the making of rational judgements. It emphasises the importance of timely and relevant information. And it reduces inequality of power.
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In addition to disclosing information organisations must be aware of the need to ensure that information is verifiable, and safeguarded where necessary .

HB 4052004

Contents
Page 1 Scope and general ..............................................................5 1.1 Scope ...................................................................5 1.2 Objectives ............................................................5 1.3 Relationship with other Standards........................6
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1.4 Regulatory Framework ........................................7 2 The Foundations of Transparency and Disclosure..............8 2.1 Transparency, Disclosure and related concepts....8 2.2 Limiting Factors on Disclosure ..........................10 2.3 Criteria for Publicly Reporting on Performance.11 2.4 Internal Transparency and Reporting .................14 2.5 Reporting Corruption .........................................15 3 Implementation ................................................................18 3.1 Transparency and Disclosure Policy ..................18 3.2 Culture of Transparency.....................................19 3.3 Stakeholder Communication and Continuous Disclosure ..........................................................20 4 On-Going Monitoring ......................................................22 4.1 4.2 4.3 APPENDIX A Annual Reporting checklists.............................................25 BIBLIOGRAPHY ..................................................................34 Education and Training.....................................22 Monitoring and Continuous Improvement ........22 Internal Audit....................................................23

HB 4052004

1 Scope and general

1.1 Scope
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This Handbook provides guidelines on disclosure and transparency practices for entities attempting to become better corporate citizens. It also emphasises the link between disclosure, transparency and corporate governance. The scope of this Handbook is not restricted to any sector, type or size of organization. This guideline is aimed at organizations interested in strengthening disclosure and transparency frameworks. Reference material is provided in a bibliography to further augment the information in this Handbook. The Handbook also provides a set of references (see Section 1.3) to other publications produced by Standards Australia, which provide guidelines on other corporate governance issues.

1.2 Objectives
The objective of this Handbook is to support the development of best practice in corporate governance through strengthening the character of disclosure and transparency arrangements employed by Australian organizations.

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HB 405-2004, Disclosure and Transparency Frameworks

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