Giving the numbers the floor
David Baur
Partner, Leader Corporate Reporting Services (CRS), PwC Switzerland
Financial reporting provides an insight into the financial situation and economic performance of a company. It is not only a legal obligation for many companies, but can also be used as a confidence-building communication tool. David Baur, head of the IFRS and Swiss GAAP FER department at PwC Switzerland, and his team are committed to high-quality and transparent reporting.
Compliance as a basis
Financial - and increasingly also non-financial - reporting combines compliance and confidence-building. Depending on the market segment and target audience, companies that have listed equity or debt instruments on a stock exchange report according to the "true and fair view" principle on the basis of recognised accounting standards such as Swiss GAAP FER, IFRS Accounting Standards or US GAAP. Increasingly, unlisted companies are also applying the "true and fair view" in their financial reporting and thus providing an account of their performance.
Own standard Swiss made
In Switzerland, Swiss GAAP FER is available as a national "true and fair view" standard. This allows a company to carry out its financial reporting in a strongly principle-orientated and less rule-based manner compared to other accounting standards. At the same time, those responsible need to be particularly sensitive to the appropriate interpretation of the standard. This is the only way to maintain the informative value and credibility of financial reporting. High-quality and conscientious reporting goes beyond mere compliance and provides the addressees with a true and fair view of the company's financial situation. This requires experience, knowledge and the will to provide resources for the quality of disclosure.
The two sides of transparency
Transparency in reporting is reflected in increased information content for the target groups. It sharpens their understanding of the business development and financial concerns of the reporting company. The flip side of the coin is that transparently communicated information and corresponding findings are also used by competitors and thus play into their hands. Where exactly the dividing line lies in relation to interests worthy of protection is often a matter of judgement. This requires a careful weighing up of interests.
The narrative must be coherent
Companies make information available to their investors and other stakeholders via a variety of communication channels. An integrated annual report of a listed company provides the necessary financial reporting, i.e. the individual financial statements of the parent company under commercial law and the consolidated financial statements in accordance with the "true and fair view". It also contains information on topics such as governance, remuneration and sustainability. Finally, they provide an insight into the management's view of the reporting year and an outlook for the future. The annual report therefore tells a story from different perspectives. Anyone reading it must be able to understand and comprehend it. The statements by the Board of Directors and Executive Board, alternative performance measures (APMs) and the core statements from sustainability reporting, for example, must form a coherent whole with the audited figures in the annual financial statements. High-quality reporting with consistent and harmonised statements across all areas is required in order to convey information in a way that builds trust.
Report objectively, do not embellish
Against this backdrop, David Baur is personally committed to ensuring that companies report objectively and without unnecessary embellishment, even in the face of economically challenging circumstances, while reflecting what is relevant for their stakeholders. Companies that also understand how to combine the various elements of reporting into a coherent overall picture not only strengthen the quality of their reporting, but also the trust placed in the company.
Conclusion
Financial reporting is a legal obligation for many companies. At the same time, it is a powerful key instrument of corporate communication. Together with the other elements of reporting, the published and audited figures should provide a coherent overall picture. This must clearly show how the company is doing financially and economically. The better the target audience can find their way around a financial report, the more valuable they will find the information provided. And the more it contributes to strengthening trust in the company.
