FERMA and the European Confederation of Institutes of Internal Auditing (ECIIA) held a joint working breakfast in the European Parliament on 28 June on the theme of “Country-by-Country Reporting: From Risks to Opportunities”. It focused on the corporate governance implications of the European Commission’s proposal of 12 April and the roles played by the risk manager and the internal auditor in this field.
Danish MEP Jeppe Kofod hosted the event and Jean-Philippe Rabine, European Commission DG FISMA (Accounting and Reporting Unit) introduced the new
financial and corporate tax reporting requirements that are intended to apply to all large multinationals for every EU country they operate.
Participants in the panel discussion, moderated by Jeppe Kofod, include for FERMA Jonathan Blackhurst, Head of Risk Management at Capita (UK); Silvio de Girolamo, Chief Audit Executive Autogrill (Italy) on behalf of ECIIA; and Jean-Philippe Rabine.
The panel said that the proposal goes further than any previous initiative with the obligation for all companies operating in the EU with a minimum turnover of €750 million in a given year to publicly disclose financial and tax information on a country-by-country basis.
About 6000 large companies will face the challenge of complying with the regulation and determining how the public will react to the tax figures they reveal – a regulatory and reputational risk.
Country-by-country reporting is not only about the numbers, but also about how well they are delivered with the right processes and the right report. Here stands the added value of risk managers, making sure that the figures have a context so that people understand the full extent of the firm’s value chain.
In this context, companies could use country-by country reporting as an opportunity to increase public confidence by presenting themselves to the public in an open and transparent manner. The public perception of corporate conduct is especially important, and to mitigate the risk of scrutiny, companies will need to ask themselves: are we doing enough – and how can we turn this into an opportunity?
The text of the regulation is currently in discussion at the European Parliament and will be discussed early July by the European Council under the new Slovak EU Presidency.