Abstract
M.Comm.
The study is an examination of current practices with regard to financial reporting to employees. International developments and disclosure requirements are examined at the outset.
Generally Accepted Accounting Practice in South Africa, like in most other countries of the world, does not require disclosure of financial information to employees. The study clearly showed that employees do have a need for financial information and that this need deserves to be addressed, while taking the skills levels of the South African labour force into consideration.
The study suggests a reporting framework geared to the specific needs of the employee as one of the many users of financial information. It is suggested that the value-added statement and employment report be part of reporting to the employees of a company. The value-added statement reports on income earned by a widely defined group of people, whereas the income statement reports on income earned for the shareholders. The value-added statement quantifies value added to the organisation by employees of the organisation. The employment report enables employees to measure returns and risks within their employer organisation in order to evaluate expectations regarding years of service, for example.
The practical implications of such a reporting framework are considered. Various benefits and disadvantages of the value added statement and employment report are examined. The writer looks at the employee report of Alusaf Limited and evaluates the report given the information needs of employees.
South Africa has a huge labour force to utilise and therefore each organisation should strive to meet the reasonable information needs of labour in South Africa. An honest effort to disclose relevant information to employees will be a
positive step in creating better relationships with labour considering the volatile labour relations in South Africa during recent years.
At the end of the study the writer comes to the following conclusions:
• Employees with their specific information needs, as AC 000 defined users of financial statements, should be recognised.
• The different competency levels of employees should be considered when publishing an employee report.
• There are advantages for both companies and employees when publishing financial information to employees.
• The value-added statement and employment report will contribute to the information needs of employees being met.
• There are companies in South Africa who are concerned about the information needs of their employees.
• It is no longer a matter of acting politically correct, it is essential for companies in South Africa to publish financial information for their employees.