There is furious debate on the nature of disclosure in the public domain right now and it is one that is fairly healthy irrespective of the controversy attached to it.
The blind trust disclosed by Christian Porter last week in his member’s interest register has had tongues wagging, with people expressing concern that such a trust could create perceptions of conflicts. A reader of the disclosure cannot know which individual or organisations have donated to meet the legal costs of the former Attorney General.
It offers a window into a discourse that is often had in accounting circles about the usefulness of disclosure and whether disclosure is actually a good proxy for accounting for assets or liabilities on the face of financial statements.
Let’s look briefly at some of the aspects of the Porter disclosure before a few important issues are addressed.
The first thing to note is that the disclosure of a blind trust is a part of several disclosures related to how his legal fees are being paid including an amount that was being paid by the ABC.
It is also important to note that the fact he disclosed the blind trust was appropriate because it exists to assist him to pay legal bills.
The thing with the disclosure is that it opens up a range of questions that are being asked by various people about who paid what amount into the blind trust to pay Porter’s legal bills. It raises additional questions about the disclosure rather than shutting the door on queries.
These questions are being asked in the context of a politician’s disclosure. They are not focused on the way in which professional services firms and others may use blind trusts to manage investments in order to ensure that beneficiaries not have a say or involvement in what shares or other instruments might be bought or sold.
In other words, they are typically used to preserve independence of decision making, but in this case a blind trust comes up against a high degree of public interest in who would put throw some coin into the bucket for legal costs to be paid.
The flare up over the blind trust over the past week, however, should be used by people to have a second look at how they frame public disclosures about the activities of their company or institution.
It ought to be used as a prompt by people to look at how they frame disclosures and how complete a story they tell.
Does what the entity says in narrative disclosure prompt further question and, if so, what kinds of questions arise?
It is important that the users of financial information get as complete a picture from an entity where possible.
This case study of a blind trust – and the disclosure of the use of the same – provides a chance for reflection for everyone responsible for signing off on disclosures.
It also goes to show that disclosure is not an end in itself but that it might require further explanation to satiate curiosity.