# **Section 10: Accounting/Information Disclosure**

Section 10 contains 16 questions related to accounting standards and information disclosure. Almost all jurisdictions (97 percent) that participated in the survey report that banks are required to prepare consolidated accounts for accounting purposes (Table A10). This represents an increase by 11 percentage points relative to 2005.<sup>18</sup> All of this increase was due to changes in the EMDEs. However, only 14 percent of countries (5 percent of advanced and 18 percent of EMDEs) report that commercial banks are required by supervisors to have external credit ratings. Regarding the disclosure practices of banks, the survey results show that, except for the case of audited financial statements, advanced economies have notably broader public disclosure practices than EMDEs. Moreover, and possibly because of the role of misleading accounting practices in the run up to the financial crisis, a slightly larger share of jurisdictions in 2010 (95 percent in 2010 compared to 89 percent in 2005)<sup>19</sup> reported holding bank directors legally liable if information disclosed is erroneous or misleading.

**<u>Table A10. Accounting/Information Disclosure: Activities: Selected Responses</u>**

||**ALL**|**ADV**|**EMDEs**|
|---|---|---|---|
|**A. Overview**|**% Yes**|**% Yes**|**% Yes**|
|Are banks required to prepare consolidated accounts for accounting purposes?|97<br>(86)|97<br>(97)|97<br>(82)|
|Are commercial banks required bysupervisors to have external credit ratings?|14|5|18|
|Are all banks operating in your country (including foreign bank branches) required<br>to make available to the public their annual financial statements:<br>On an individual basis?|92|84|95|
|On a consolidated basis(if applicable)?|89|92|88|
|Do supervisors require banks to publicly disclose:<br>All fines and settlements resulting from non-compliance with regulations?|22|16|24|
|Other information not required byfinancial reportingstandards?|41|49|38|
|Are bank directors legally liable if information disclosed is erroneous or<br>misleading?|95<br>(89)|97<br>(92)|95<br>(88)|
|**B.**<br>**Disclosure Practices of Banks**|**% Yes**|**% Yes**|**% Yes**|
|Do banks disclose to the public:||||
|Full audited financial statements?|94|92|95|
|Off-balance sheet items?|78|86|74|
|Governance and risk management framework?|73|86|68|
|Regulatory capital and capital adequacy ratio?|77|86|74|
|Transactions with related parties?<br>|70|86|64|
|Any other material information?<sup>*</sup><br>|74|81|72|
|Scope of consolidation?<sup>**</sup>|76|89|71|

Source: Calculations based on the 2011–12 Bank Regulation and Supervision Survey, which reflects values as of 2010. Values in parentheses refer to the 2007 Bank Regulation and Supervision Survey, which captures data as of 2005. ADV: advanced economies, EMDEs: emerging and developing economies (see Table 1 provides the complete list of countries).

* Such as information which omission or misstatement could change or influence the assessment or decision of a user relying on that information for making decisions.

** Including reasons for not including certain entities, where appropriate.

18 If we focus on the matched sample, the increase is smaller from 90 to 96 percent.

19 If we limit our analysis to only those countries that have responded to both surveys, the gap is smaller (92 percent in 2005 and 95 percent in 2010).

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