DISCLOSURE AND TRANSPARENCY

OECD Principles Disclosure and Transparency The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company.

KNKG Asas GCG yaitu transparansi, akuntabilitas, responsibilitas, independensi serta kewajaran dan kesetaraan

Information Asymmetry Information asymmetry: some parties to business transactions may have an information advantage over others Two major types of information asymmetry Adverse selection Moral hazard

Information Asymmetry (Cont’d) Adverse selection One or more parties (managers and other insiders) to a business transaction, or potential transaction, have an information advantage over other parties (investors) This may affect the ability of investors to make good investment decisions Financial accounting and reporting as a mechanism to control the adverse selection problem by converting inside information into outside information

Information Asymmetry (Cont’d) Moral Hazard One or more parties to a business transaction, or potential transaction, can observe their actions in fulfillment of the transaction but other parties cannot. Occurs because of the separation of ownership and control Accounting net income as a measure of managerial performance

Important Role Independent audit Accounting and disclosure standards Corporate governance – board and audit committee

Regulasi BAPEPAM-LK Kewajiban bagi Emiten dan Perusahaan Publik untuk menyampaikan Laporan Tahunan: Ikhtisar data keuangan penting Laporan dewan komisaris Laporan direksi Profil perusahaan Analisis dan pembahasan manajemen Tata kelola perusahaan Tanggung jawab direksi atas laporan keuangan Laporan keuangan yang telah diaudit

Regulasi BAPEPAM-LK (Cont’d) Peraturan Nomor VIII.G.7 Tentang Pedoman Penyajian Laporan Keuangan Peraturan ini menetapkan bentuk, isi, dan persyaratan dalam penyajian laporan keuangan yang harus disampaikan oleh Emiten atau Perusahaan Publik

Regulasi BAPEPAM-LK (Cont’d) Pedoman Penyajian dan Pengungkapan Laporan Keuangan Emiten atau Perusahaan Publik (P3LKEPP): Untuk memberikan suatu panduan penyajian dan pengungkapan yang terstandarisasi dengan mendasarkan pada prinsip-prinsip pengungkapan penuh (full disclosure), sehingga dapat memberikan kualitas penyajian dan pengungkapan yang memadai bagi pengguna informasi yang disajikan dalam pelaporan keuangan Emiten atau Perusahaan Publik. Aturan yang lebih detil sebagai acuan untuk pelaksanaan guna melaksanakan Peraturan Nomor VIII.G.7 tentang Pedoman Penyajian Laporan Keuangan

Regulasi BAPEPAM-LK (Cont’d) P3LKEPP (Cont’d) Industri Manufaktur Industri Investasi Industri Rumah Sakit Industri Jalan Tol Industri Perhotelan Industri Restoran Industri Telekomunikasi Industri Konstruksi Industri Perdagangan Industri Transportasi Industri Real Estate Industri Peternakan Industri Perkebunan

Regulasi BAPEPAM-LK (Cont’d) P3LKEPP (Cont’d) Industri Pertambangan Umum Industri Minyak dan Gas Bumi Industri Perbankan

Regulasi BAPEPAM-LK (Cont’d) Peraturan Nomor X.K.1 : Keterbukaan Informasi yang Harus Segera Diumumkan kepada Publik

Empirical Evidence Botosan (1997) Sengupta (1998) For a sample of firms with relatively low analyst following, greater disclosure is associated with a lower cost of equity capital Sengupta (1998) Documents a statistically significant negative association between a measure of a firm’s overall quality disclosure and two alternative measures of a firm’s incremental borrowing cost

Internal Control

Definition CORPORATE GOVERNANCE: “the system by which business corporations are directed and controlled. ” INTERNAL CONTROL: “a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: Effectiveness and efficiency of operations Reliability of financial reporting Compliance with applicable laws and regulations

Five Components Control environment Risk assessment Control activities Information and communication Monitoring

What Internal Control Can Do? Internal control can help an entity achieve its performance and profitability targets, and prevent loss of resources. It can help ensure reliable financial reporting. It can help ensure that the enterprise complies with laws and regulations, avoiding damage to its reputation and other consequences. In sum, it can help an entity get to where it wants to go, and avoid pitfalls and surprises along the way.

What Internal Control Can Not Do: Internal control cannot change an inherently poor manager into a good one. Shifts in government policy or programs, competitors' actions or economic conditions can be beyond management's control. Internal control cannot ensure success, or even survival. An internal control system, no matter how well conceived and operated, can provide only reasonable--not absolute--assurance to management and the board regarding achievement of an entity's objectives.

What Internal Control Can Not Do: Controls can be circumvented by the collusion of two or more people, and management has the ability to override the system. Another limiting factor is that the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Roles and Responsibilities Everyone in an organization has responsibility for internal control Management Board Internal Auditors Other Personnel External auditors contribute directly through the financial statement audit and indirectly by providing information useful to management and the board in carrying out their responsibilities