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The Impact of Integrated Reporting

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International Federation of Accountants
International Federation of Accountants

Presentation by Graham Terry, Senior Executive: Strategy and Thought Leadership, the South African Institute of Chartered Accountants, given during the International Federation of Accountants’ Council Seminar, A Fundamental Shift in Corporate Reporting.

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THE IMPACT OF INTEGRATED REPORTING IFAC ANNUAL SEMINAR – A FUNDAMENTAL SHIFT IN CORPORATE REPORTING Presented by Graham Terry Senior Executive: Strategy and Thought Leadership
Components of Market Value S&P 500 Physical and financial assets Other assets 17 32 68 80 81 83 68 32 20 19 1975 1985 1995 2005 2009 Source: Towards integrated reporting - Communicating Value in the 21st Century – International Integrated Reporting Council
Increasing length and complexity Source: Investis research - PwC
“Corporate reporting … has got too big, too cumbersome and incomprehensible …” Source: Tomorrow’s Corporate Reporting : A Critical System at Risk – CIMA and PwC
King III South Africa
Integrated Reporting Framework
What is integrated reporting? Integrated Reporting combines the most material elements of information currently reported in separate reporting strands - (financial, management commentary, governance and remuneration, and sustainability) in a coherent whole, and importantly: • shows the connectivity between them; and • explains how they affect the ability of an organization to create and sustain value in the short, medium and long term. International Integrated Reporting Council Discussion Paper
Integrated Thinking
Research & awards
 Wait and see approach  Shorter reports better  Recognition of other stakeholders  Explaining business model  Improved financial reporting  Linkage to sustainability  Improved disclosure around value added and resources consumed  Improved disclosure on risks Some trends
78% of companies used the term Annual Integrated Report IRC Research Conducted by - College of Accounting, University of Cape Town
60% of Boards endorse Integrated Reports IRC Research Conducted by - College of Accounting, University of Cape Town
57% of reports - to be read by stakeholders other than investors IRC Research Conducted by - College of Accounting, University of Cape Town
17% shorter than 100 pages IRC Research Conducted by - College of Accounting, University of Cape Town
International Position
 UNEP FI  Accountancy  Academics profession  Financial Stability Board  Global Reporting  World Bank Initiative  International  Global Compact Organisation of  IASB/FASB Securities Commissions  Global Companies  Government  WBCSD representatives  Transparency  WWWF International  UNCTAD  Stock exchanges International Integrated Reporting Council
Pilot programme
Examples Database
Assurance improves credibility of Report
Thank You

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The Impact of Integrated Reporting

  • 1. THE IMPACT OF INTEGRATED REPORTING IFAC ANNUAL SEMINAR – A FUNDAMENTAL SHIFT IN CORPORATE REPORTING Presented by Graham Terry Senior Executive: Strategy and Thought Leadership
  • 2. Components of Market Value S&P 500 Physical and financial assets Other assets 17 32 68 80 81 83 68 32 20 19 1975 1985 1995 2005 2009 Source: Towards integrated reporting - Communicating Value in the 21st Century – International Integrated Reporting Council
  • 3. Increasing length and complexity Source: Investis research - PwC
  • 4. “Corporate reporting … has got too big, too cumbersome and incomprehensible …” Source: Tomorrow’s Corporate Reporting : A Critical System at Risk – CIMA and PwC
  • 7. What is integrated reporting? Integrated Reporting combines the most material elements of information currently reported in separate reporting strands - (financial, management commentary, governance and remuneration, and sustainability) in a coherent whole, and importantly: • shows the connectivity between them; and • explains how they affect the ability of an organization to create and sustain value in the short, medium and long term. International Integrated Reporting Council Discussion Paper
  • 10.  Wait and see approach  Shorter reports better  Recognition of other stakeholders  Explaining business model  Improved financial reporting  Linkage to sustainability  Improved disclosure around value added and resources consumed  Improved disclosure on risks Some trends
  • 11. 78% of companies used the term Annual Integrated Report IRC Research Conducted by - College of Accounting, University of Cape Town
  • 12. 60% of Boards endorse Integrated Reports IRC Research Conducted by - College of Accounting, University of Cape Town
  • 13. 57% of reports - to be read by stakeholders other than investors IRC Research Conducted by - College of Accounting, University of Cape Town
  • 14. 17% shorter than 100 pages IRC Research Conducted by - College of Accounting, University of Cape Town
  • 16. UNEP FI  Accountancy  Academics profession  Financial Stability Board  Global Reporting  World Bank Initiative  International  Global Compact Organisation of  IASB/FASB Securities Commissions  Global Companies  Government  WBCSD representatives  Transparency  WWWF International  UNCTAD  Stock exchanges International Integrated Reporting Council

Editor's Notes

  1. Key point: …even though it is trying (quantity over quality)Undue focus and commitment of effort on financial aspects of modelLacking in strategic focus (wood for trees)Increasing length, complexity and clutter in reports (haphazard evolution)External reporting increasingly separate from internal management informationGovernance reporting (last place to look)Sustainability reporting - often a stand alone siloUncertainty on what's audited