Timetable for listed companies filing audited statements should be re-examined — Jain
THE current timetable given to file audited financial reports could pose serious challenges to companies listed on the Jamaica Stock Exchange (JSE), said Alok Jain, partner at PricewaterhouseCoopers.
Currently, JSE allows companies 90 days to submit their year-end financial statements; a standard Jain said is "reasonable" and "accepted" worldwide.
However, the Financial Services Commission (FSC) requires that companies file unaudited fourth (last) quarter financial results within 45 days after the end of the last quarter. Additionally, companies are expected to submit their audited financial statements within 90 days after the financial year-end.
Listed companies can opt not file the unaudited 4th quarter within 45 days if they instead file their audited statements within 60 days. Therein lies the problem, said Jain, who was speaking at the FSC's Corporate Governance seminar at the Pegasus Hotel yesterday. "Quite a few companies choose this option as they do not want the embarrassment or market confusion that could be caused by the fourth quarter unaudited numbers differing from the audited numbers."
In doing so, companies involuntarily lose an additional 30 days, as provided by the JSE, which could have been used to allow adequate time to review the report, Jain said.
"You can't set the standard for only the best ones, because we have a range of all the different companies," he said. "I think 90 d ays is accepted as the norm, almost universally, for year-end ing reporting of audited statements", he told Caribbean Business Report. "In the United States, it is only the largest public companies like General Electric, Apple and Microsoft that have to file in 60 days. Smaller listed companies get up to 90 days."
"I'm speaking in general terms, as there are exceptions", he said. "There are some companies that do have the systems and the governance in place" adding that his "appeal" is for "the average company out there".
Since all companies aren't able to practically comply with the ruling of the JSE, Jain gave two possible outcomes.
"You could say this is the timetable and insist that people meet it." He continued however, "Understand that putting in place systems and controls (to do two reports or to effectively do one in 60 days) cost money."
"It is a question of cost versus benefit. Given the state of our economy and the pressures that businesses are under, is this the best use of the money now or is 90 days quite acceptable?"
There's little else that can be done, he said, as it is not a matter for the FSC or the JSE.
"It's a question of the companies ensuring that they have the personnel, systems and control to be able to achieve that timetable without taking that kind of risk where there isn't proper time given to key committees to digest the information and ask the key questions," he said. "Everything is rushed in trying to meet that deadline.
The FSC is charged with supervising and regulating the securities, insurance and private pensions industries.