Qualitative characteristics of information on Risk and Internal Controls

The information on risks and internal controls should be high quality information. 

This means that it enables the full information content to be conveyed to the board in a manner that is clear and has nothing in it that would make any part of it difficult to understand. Communications should be reliable, relevant and understandable. They should also be complete.

1. Reliable

By reliable means the trustworthiness of the information: the assumption that it is ‘hard’ information, that it is correct, that it is impartial, unbiased and accurate. Even In the event of conveying bad news.

2. Relevant

By relevant means not only that due reports should be complete and delivered promptly, but also that anything that that should be brought to the board’s attention, should be brought to the board’s attention while there is still time for them to do something about it.

3. Understandable

Not all directors possess the technical and nautical knowledge of senior operating personnel of the company. It is therefore particularly important that information conveyed is understandable. This means that it should contain a minimum of technical terms that have obvious meaning to operating managers but may not be understandable to a non-specialist. All communication should therefore be as plain as possible within the constraints of reliability and completeness. 

4. Complete

By complete means that all information that the directors need to know and which the operating managers have access to, should be included, regardless of any inconvenience that it may cause to one or more colleagues.