Investors want greater transparency in financial reporting and overwhelmingly believe that audit committees of listed firms should issue commentaries to shareholders stating their own views on key issues.

A survey of 33 institutional investors and 171 retail investors conducted by the National University of Singapore Business School found that all the institutional investors and 95 per cent of retail investors said commentaries would be a useful supplement to financial reporting.

Associate Professor Mak Yuen Teen, who authored the report, said: "Such commentary by audit committees would enable them to communicate their independent views to the shareholders and demonstrate how they have discharged their oversight duties with respect to financial reporting... Audit committees need to step up and meet investors' expectations of more communications between them and investors."

Senior Minister of State for Law and Finance Indranee Rajah urged audit committees yesterday to consider providing such commentary in their annual reports. "We hope to encourage greater shareholder activism in Singapore," she said, noting that Britain has already introduced audit committee reporting in its Corporate Governance Code.

The NUS study was commissioned by the Accounting and Corporate Regulatory Authority and the Institute of Singapore Chartered Accountants. The two bodies and the Securities Investors Association (Singapore) will publish a guide early next year to help retail investors understand information like the Singapore Exchange listing rules and enhanced auditor reporting standards which take effect next year.

Marissa Lee