Restoring trust in financial reporting

Restoring trust in financial reporting

NOT long ago, Olam came under intense scrutiny. Allegations were made about its financial statements not clearly revealing the state of its financial health. Olam put in a robust defence. Its shareholders and the investor community paused to think hard about what was at stake.

With Olam's share recovering to the levels prevailing before the allegations started, I thought it was a good time to respond to a question that was raised: How can the accountants allow this to happen?

It is a valid question, highly relevant to our capital markets in Singapore which are built on trust. Trust that companies follow the rules, trust that auditors are independent and alert, and trust that enforcement agencies do their job.

When there is widespread fear that financial reports are unreliable, capital markets cease to function. An attack on a Singapore company that suggests it is not playing by the rules strikes at that trust.

This erosion of trust was clear, when in the midst of the storm a press commentary suggested that Olam should engage an independent international consultant based in New York, London, or Hong Kong to audit its books.

While I should state my interest as a Singapore-based accountant, I am happy that this was not the route that Olam chose.

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