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Though the Middle East has done well in introducing appropriate regulations to ensure proper corporate performance, it falls behind in the sphere of compliance, said senior officials from finance and management companies.
"Though the region has done well as far as introducing regulations is concerned, it falls behind in implementing them. Oman is probably an advanced country on this account, but then others including Saudi Arabia fall behind. Countries such as Yemen and Lebanon are far behind as far as compliance is concerned. Steps to ensure compliance [to corporate governance] have just begun to be taken in Tunisia and Morocco," said Ashraf Gamal El Din the Executive Director of the Egyptian Institute of Directors. He was speaking on the sidelines of a conference on risk management and compliance organised by Allied Compliance Consultants (ACC).
Ashraf said the problems acerbates if the company concerned is a family-owned enterprise. "That's when the companies are no longer bound to be reporting their financial performance let alone the non-financial performance. A lot of money lies with them and they share a prominent portion of the region's trade. Many family owned enterprises in Saudi Arabia are not comfortable with the idea of disclosing their financial statements or their compliance to corporate governance principles."
Mohamed Tarek Youssef, a Principal Partner with assurance and tax advisory firm Grant Thornton Mohamed Hilal, said the situation is expected to ameliorate in the UAE as it would become mandatory for listed companies to disclose the extent of their compliance to corporate governance principles from April 2010 onwards. "I believe the other countries in the region will follow suit," said Youssef.
Brad J Monterio, a member of the Institute of Management Accountants (IMA), said though companies comply with financial disclosures, they shy off from disclosing their corporate governance compliance to audit teams.
"There are some large loopholes as far as non-financial reporting is concerned. There are no central or globally recognised regulations. There is no sustainability reporting," said Monterio.
However, there are no figures that could quantify the losses in firms not obeying corporate governance rules.
By Shashank Shekhar
© Emirates Business 24/7 2009
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