The President of the Association of Chartered Certified Accountants (ACCA), Mr Dean Westcott, has called on policymakers and the accountants to champion the value of disclosure and assurance.
He said this at a press conference in Uganda, after the launch of two reports christened “The Rise of Capital Markets in Emerging and Frontier Economies”, and “Making Capital Markets Work in Emerging and Frontier Economies”.
Mr Westcott said “Capital markets play an important role in promoting robust economic activity. Emerging capital markets are clearly an increasingly important source of finance to business.”
“Broadening participation in company ownership, especially where the needs of minority shareholders are concerned, requires clear corporate governance, responsiveness to the many needs of investors, consideration of independent representation on the company board and transparency of decision-making in the interests of all investors and wider stakeholders,” he added.
Mr Westcott said developing capital markets needed increasingly transparent corporate governance and ethical business approaches to encourage investor confidence. And in the future, we are sure that environmental, social and governance reporting is likely to become part of a broadening landscape of corporate disclosure and reporting.
He also said this complexity in market structures led to a need for increasingly sophisticated financial management, which meant that finance functions had to rise to the challenge and play a more central role in governance, risk and compliance, alongside financial reporting and management accounting.
“Such complexity requires an organisation that is externally focused, with its aims focused on building investor confidence and capable of delivering performance targets which bring shareholder value – and being able to measure and provide assurance on what shareholders value,” he said.
Mr Westcott said the ACCA believes that capacity building around financial systems is essential.
He indicated that allowed capital markets to enable the most promising firms – both large and small – to source funds more cheaply and reliably than would otherwise be possible.
Mr Westcott added that to do this, these firms need access to reliable financial information, which in turn depends on the skills and competences of professional accountants.
According to Dean Westcott, “It is pleasing to see fledgling capital markets succeed, but as an accountancy body, it is important for us to understand how the profession can help support these developments further and promote financial knowledge and understanding.”
“Investors cannot be expected to assume the risk that comes with investing in what is often a novel and illiquid asset class without the best quality information possible, and they cannot be expected to participate in markets where crucial information remains private”, he added.
He also said that was why policymakers and the accountancy profession around the world have long championed the value of disclosure and assurance and must continue to do so.
Mr Westcott ended by saying “Our reports show that the perceived strength of accounting and auditing standards is a leading indicator of the health of capital markets and a strong predictor of their ability to drive economic growth.”