For more effective corporate reporting, the EU needs effective governance, not just templates

Trust in EU corporate reporting won’t be restored by longer templates. It will come from governance that works: boards that own the reporting process, audit committees that can challenge, and internal controls that are designed, operated and explained. Today, practice is uneven across Member States and many issuers don’t clearly state how effective their controls are.

What the EU needs, is a practical, light-touch fix: a short management statement on internal controls (naming the framework and any material weaknesses), stronger audit-committee capability and common terminology where it improves comparability - scaled to company size and maturity.
 
The result is more credible numbers, lower information asymmetry and higher confidence.

Apostolos Thomadakis is Research Fellow and Head of the Financial Markets and Institutions Unit at CEPS, and Head of Research at ECMI. This commentary is based on the ‘Study on the effectiveness of the framework for corporate governance underpinning the quality of corporate reporting’ for DG FISMA. Comments received by Maria Althin, Andrew Hobbs, Agustina Korenblit, Karel Lannoo and Julia Redenius-Hövermann are greatly acknowledged. These comments were given in a personal capacity and do not necessarily reflect the views or positions of their respective organisations.