Time To Retink Accounting Reporting?

Posted on Business Times: Time to rethink reporting?

• Some quarters argue that the numbers that come out in quarterly reporting, especially during an economic downswing like now, may not fairly or accurately reflect a company's true value
  
  MANY companies listed on Bursa Malaysia have reported a steep drop in quarterly profit, or even losses, as a result of current market turmoil.
  
  While their results this quarter were clearly under pressure, the fundamentals behind some of these companies remain firmly intact.
  
  Some quarters believe it may be timely for Malaysia to make its listed companies report their financial results on a half-yearly basis instead of quarterly.
  
  Their argument is that quarterly reporting encourages short-term focus on immediate results by both management and investors.
  
  As such, the numbers that come out, especially during an economic downswing like now, may not fairly or accurately reflect a company's true value..... (read rest of article here )

I don't buy such arguments.

The current earnings reporting reflects how a company is performing currently.

And yes, CURRENTLY, the business economics have turned really bad for many business sectors but what the article is suggesting is really lacking.

Are they telling us to discount the weakness and pretend that what is happening is not real?

Are we living in a delusional world?

Do we want to live in one?

• MANY companies listed on Bursa Malaysia have reported a steep drop in quarterly profit, or even losses, as a result of current market turmoil.

Think of that statement for a moment.

Some of these companies that are reporting losses now, why are they reporting the losses?

Doesn't it clearly reflect the lack of the companies' competitive advantage or the lack of the management? Or perhaps were theses companies highly geared?

See also: Half-yearly versus quarterly reporting: Which shall it be?

• TAN SRI MEGAT NAJMUDDIN MEGAT KHAS, president of the Malaysian Institute of Corporate Governance and chairman of SEG International Bhd.
  
  I think it is a good idea, and should be taken into serious consideration. Companies should be given an option to report quarterly or half-yearly. If companies report their numbers once every six months, investors and the public can get a clearer picture and better understanding of a company's financial health.
  
  ANNUAR MARZUKI ABDUL AZIZ, chief financial officer of PLUS Expressways Bhd.
  
  I think it is better to report quarterly. In such economic times, investors, stakeholders cannot be left in the dark for too long. Besides, as long as there is a proper system and process in place, quarterly reporting is not all that troublesome as compared to half-yearly reporting.
  
  JOSEPH TAN, chief financial officer of F&N Holdings Bhd.
  
  "It would be less work for us. But these days, certain investors are concerned over how companies perform. Quarterly numbers will give them more input. But it really depends on a company's business. For FMCG (fast-moving consumer good) companies like us, the industry changes very quickly. So, quarterly reporting will help reflect those changes to investors very quickly.