Transparency key criteria for Annual Report Awards

December 08, 2014 | 10:29
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The Vietnam Annual Reports Awards 2015 were announced on Friday last week, with an emphasis on stricter qualifying processes and new judges.

The Annual Reports Awards 2015 were officially launched last week

The Vietnam Annual Report Awards is a contest for the best annual reports from companies listed on the Ho Chi Minh Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX). These reports must have been officially submitted on time to HOSE or HNX during the 2014 fiscal year to be considered.

Co-organised by HOSE and VIR’s sister publication Dau tu Chung khoan, the eighth contest is expected to attract over 700 annual reports from firms all around Vietnam.

VIR editor-in-chief Nguyen Anh Tuan said at the press conference last week that the announcement for 2015 ARA came much earlier than previous years because the organisers wanted firms to have a longer preparation time.

As usual, the panel of judges includes representatives from HOSE, HNX, the International Finance Corporation (IFC), Ho Chi Minh City University of Economics and VIR’s sister publication Securities Investment. High-profile fund management firm Dragon Capital continues to be the contest’s sole sponsor.

At the press conference, Tuan stressed that 2015 would see two important changes that are aimed at improving the competition’s quality.

Firstly, the qualifying process will be much more rigorous. This is to enhance voting standards and encourage greater information transparency from listed firms. Specifically, the judges will eliminate annual reports that lack one of the major criteria or come from firms that violate rules of publishing information in the year 2014. Moreover, reports that have not been certified by auditors will also be excluded from the competition.

Secondly, the panel of judges for 2015 will welcome two new members from the State Securities Commission of Vietnam and the Vietnam Association of Accountants and Auditors.

The classification for this year’s awards will remain the same. The three categories are based on the top 10, 20 and top 50, based on the grades given by the judges. The outstanding award will be granted to the firm with the highest grades in the top 10 and an excellent report in terms of both content and presentation.

The 2015 ARA continues to uphold the criteria of high standards, transparency, professionalism and creativity in annual reports. As usual, business performance will not be considered in this competition.

At the press conference, experts agreed that despite vast improvements in recent years, annual reports still lacked vital information about the firm’s operations.

Tran Anh Dao, deputy CEO of HOSE, pointed out three weaknesses: firstly, information on investment is not transparent enough, and changes in the firm’s activities or income statistics often go without explanation, leaving the investors clueless and confused. Secondly, an honest evaluation of the board of management is missing most of the time. Lastly, the risk management section has yet to be taken seriously.

For sustainable development reports, Pham Nguyen Vinh, business development director of Dragon Capital, said, “Many companies in Vietnam are unfamiliar with sustainable development, so reports on this issue tend to be simplistic and lacking.”

When asked about reasons why annual reports in Vietnam still fail to reach international standards, Nguyen Thi Hoang Lan, deputy CEO of HNX, said, “It is possible that firms have not realised the importance of a high-quality annual report yet. Moreover, some in remote areas may have not received adequate training.”

Complicated guidelines on sustainable business reports may have discouraged firms from doing sustainability reports properly, Vinh added.

Nguyen Son, market development director of the State Securities Commission, said that sympathy should be given to businesses as they face many difficulties while completing annual reports.

“Some firms are afraid that if they include too many details in the report, they will risk exposing confidential information to competitors. Moreover, many businesses are small to medium-sized and do not have enough people or equipments,” said Son.

However, he asserted that high standards of professionalism and transparency in annual reports will help Vietnam attract more global investors and lift the national economy.

Son added that the government would also tighten annual reports rules. For example, the recent Circular 52 requires firms to be elaborate on their risk management section.

Organisers and judges hoped that through ARA, firms would realise the importance of a transparent annual report in terms of attracting potential investors.

Dominic Scriven, OBE, CEO of Dragon Capital Group Ltd, said: “Improving the quality of annual reports should be a non-stop and long-term journey for every listed firm. ARA will act as both a guide for firms towards better reports preparation and a huge encouragement for them to continue this journey.”

“In foreign investors’ eyes, by participating in this competition, Vietnamese companies definitely show their commitment to enhancing annual reports,” he added.

In addition, the Sustainability Reporting Awards (SRA) will continue in 2015, following the success of the previous two years.

The latest date for publicising the annual reports is March 31, 2015 and the deadline for ARA entry submission is April 21, 2015. Results for the preliminary round are set to be published in May 2015, and the award ceremony will be held in July 2015.

By By Nam Phuong

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