Country by country (CBC) reporting is the breakdown of a company’s financial performance for each country of operation or trading presence, as opposed to consolidated financial reporting or reporting organised along the lines of production or business units.
CBC reporting is a type of financial disclosure and not a mechanism in itself. Therefore there are various avenues through which it can be introduced: be it for instance as a stock listing requirement to cover public companies or through the regulation of accounting standards.
CBC reporting will yield information which would help citizens ensure that proceeds from their natural resources are being properly managed. The payments made by a company to a government will be revealed, this way the money can be tracked and the government can be held accountable for how it is spent. Project-by project reporting of payments will also help citizens track what they are entitled to receive from central government for revenues generated from projects in their own back yard. This information is also useful for investors seeking to manage risk and who wish to ensure a healthy long term investment climate.
In addition to CBC reporting of payments, full CBC information such as production, profits, sales and costs will also help assess whether a government is receiving a fair amount for its resources and whether it is receiving the correct amount for its resources. By revealing intra-group trade figures, (trade between companies under common ownership but across borders) full CBC would be able to reveal the patterns of financial flows and highlight instances of tax dodging.
So far, PWYP has had success in passing a law in the United States to bring about country by country reporting of payments and we are close to achieving the same goal in the European Union.
October 2011 – PWYP achieved a milestone in the campaign to introduce European legislation for country-by-country reporting of payments. On 27 October 2011, the EU Commission proposed amendments to the Transparency and Accounting Directives to introduce country-by-country reporting for listed (and large non-listed) extractive companies. This was a result of a concerted and coordinated campaign by European members of PWYP.
Currently, the proposals are making their way through the EU legislative process. Once they have been passed, each country will have to transpose them at a national level for them to become law. For more information on this, read our Q&A.
June 2010 – President Obama signed the US Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1504 of this act requires extractive companies listed in the US to publish their payments on a country-by-country and project-by-project basis. For more information visit our Stock Exchange Listing Requirements page or our Dodd-Frank 1504 page.