KARACHI, Dec 6: Companies listed on the stock exchanges are not required to prepare quarterly accounts for the second quarter of the year, as half-yearly accounts are already being prepared instead, but for each of the other three quarters, financial statements must be circulated within one month of the close of that quarter, an official at the Securities and Exchange Commission of Pakistan (SECP) said.
He said this to clarify several queries in relation to the SEC notification of November 5, wherein all listed companies had been directed to submit quarterly accounts, in line with the global practice of providing maximum disclosures on the important financial information of the publicly traded companies.
Half yearly and annual accounts would continue to be submitted in accordance with the prevalent provisions of the Companies Ordinance, 1984. “Half yearly accounts will be submitted within two months and annual accounts within six months of the close of the accounts,” the SEC said.
The quarterly accounts, which must be approved by the company boards, should be drawn according to the format laid out in IAS-34. They include: Condensed profit and loss account; condensed balance sheet; cash flow statement; statement of changes in equity and selected notes to the accounts.
“Comparative figures shall be provided in quarterly accounts as laid down in the IAS-34 when such figures are available,” the SEC said.
The regulation concerning the quarterly accounts becomes effective for financial statements covering periods ending on or after December 31, 2001, by virtue of which all 748 listed companies would have to come up with their first quarterly accounts by January 31, next.
The Chairman SECP, Khalid Mirza has already brushed aside objections from some corporates regarding the ‘cost’ and ‘impracticality’ of producing the quarterly financial statements, saying that barring some exceptional cases, those were only lame excuses. SECP chief says that the benefits of figures disclosed on a single sheet of paper, would far exceed their cost.
Analysts, stock holders and users of financial statements are decidedly for greater and faster disclosures. They are solidly behind the Regulators’ move to ask corporates to disseminate the quarterly numbers. But some analysts are looking forward to limiting the maximum time for release of full year accounts from six to four months of the close of the year.
A brief board’s review on the quarterly operations does not appear to be a requirement, which makes some analysts wonder if bare numbers would suffice to convey much without a review to explain them. But in the first phase, when a number of companies are sore on even providing the quarterly figures, asking for a review, may have seemed, asking too much. That might come at a latter stage. That and possibly also ‘profit warnings’ as are the norms in developed markets of the world.