Lankan firms “moderately transparent” in corporate reporting: TISL

Companies in Sri Lanka are deemed to be “moderately transparent” in corporate reporting as per a study published by Transparency International Sri Lanka (TISL) yesterday. 

The Transparency in Corporate Reporting Assessment (TRAC) 2021 report assesses the top 75 Public Limited Companies on the Colombo Stock Exchange (as per market capitalisation on 1 June 2021) on the level of transparency in the disclosure of information.  

The assessment, which is being conducted for the second consecutive year, scores and ranks companies on three different thematic areas crucial to fighting and preventing corruption: reporting on anti-corruption programs, transparency in company holdings and the disclosure of key financial information in domestic operations. 

The TRAC is compiled by TISL.

The research found that companies on average are Moderately Transparent in corporate reporting, with a score of 6.93 out of 10, where 0 is the Least Transparent and 10 is Fully Transparent. The average score of 6.93 is slightly higher than the score obtained in the previous assessment (6.73) conducted in 2020. The 2020 TRAC report assessed 50 companies. 

John Keells Holdings, Commercial Bank of Ceylon and Dialog Axiata are the companies which recorded the highest overall scores in the assessment. John Keells Holdings PLC ranked first for the second consecutive year, being the only company to obtain the full overall score for transparency in disclosure practices. 

Companies were scored and ranked based on publicly available information pertaining to the company. Information was sourced from the latest Annual Reports (2020 or 2020/21) published by companies, company websites, and other publicly available company documents. Each company’s individual scoresheet may be viewed at tisrilanka.org/trac2021/.  

It is important to note that the TRAC report does not assess the implementation of companies’ anti-corruption policies or programs. Therefore, a low score does not necessarily mean that a company does not have strong anti-corruption programs nor does it indicate any wrongdoing on the part of the company. Likewise, while a high score may illustrate strong disclosure systems, it may not necessarily reflect operational and implementation success. 

The private sector in Sri Lanka is usually seen as an enabler of corruption. This notion is further exacerbated by the fact that there is no mandatory requirement for the private sector to publish information on their community contributions, corruption mitigation strategies or their organisational structures. 

Committing to be fully transparent in the disclosure of key information is an important step that demonstrates a company’s level of accountability and social responsibility, which is why the TRAC assessment aims to ascertain, recognise, guide and encourage transparency in corporate reporting. 

TISL Executive Director Nadishani Perera commenting on the report said: “The report provides detailed recommendations for companies on how to improve their disclosure practices which would lead to better scores as well. The report also highlights the importance of regulatory change with recommendations to the Government on amending the relevant laws and regulations. 

“While congratulating the top ranked corporates as well as the most improved companies, we hope that all those assessed will use this as a catalyst for continued improvement, turning disclosure practices into operational norms.”