Open letter to all independent directors in South Africa

Dear Independent Director,

Seeing what's happening at Steinhoff, you may be reevaluating your position as an independent director on the boards of the companies you serve. You don't know whether to trust the management, you don't even know if you can rely on the statutory auditors to red flag issues of concern in a timely manner. Now that must be scary.

But there is something you can do to get the trust back.

First, some background. Come July, CIPC in South Africa will only accept filings in a format called iXBRL. It could not have come at a better time for South Africa. CIPC requires only that Annual Financial Statements be submitted to it in iXBRL, which means that companies have to adopt this reporting standard for external reporting, which is basically to the CIPC. You may also want to know that it is only a matter of time before other financial regulators in South Africa ask that all submissions be made in iXBRL

You can go one step further.

What you can do is to take the lead and ask the management of the companies whose boards you serve on to adopt the same format for internal reporting as well. This will make it expensive for them to fudge numbers thereby ushering in a much higher degree of transparency in what they report to the board. A light will shine on the troublesome areas, be they related party transactions or dealings with subsidiaries and associate companies.

If you want to have your company rated higher than your peers, this is the way to go. If you want public capital to identify you as a company with great governance and a company which can be trusted, and therefore deserving of higher valuations, this is the way to go. What you may want to know is that sooner or later every company will go this way.