Members of the American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA) took part in a brief survey to help develop a better understanding of the integrated reporting value proposition.
Says Zahra Cassim, Head of CIMA South Africa: "C-Suite executives recognise the importance of a wider purpose to business for the future. The most significant areas of increasing importance are social and environmental stewardship, inspiring and engaging people, and partnering with suppliers."
The survey results were used to inform the development of a CGMA report entitled the IR Landscape - Executive perceptions of integrated reporting, which was a collaboration between CIMA, the AICPA, Black Sun, Tomorrow's Company and the International Integrated Reporting Council. The report is complemented by a guide and a toolkit for CEOs, CFOs and chairmen to help them facilitate and lead discussions on how integrated reporting can help their businesses.
Says Zahra: "This collaboration at such a strategic level has great significance for how the roles of management accountants are changing; as the report highlights that best practice management accounting is the key to robust integrated reporting. It is the missing link in aligning financial and non-financial accounting, and with the ability to look ahead, it helps to identify and manage risks more effectively, whilst driving improvements in business decision making."
For the IIRC, the report was commissioned to understand how integrated reporting can be of greatest value for business leaders - and how best to state the case for integrated reporting putting the needs of those leaders first.
For Tomorrow's Company, the London-based think tank, the report takes forward its mission to shape the future of business success to build lasting value, learning from and with those living day-to-day with achieving this in practice.
Says Zahra: "For CIMA, this is part of our commitment to support the future performance of organisations by helping CFOs and others in the management accounting teams globally to enhance organisational reporting.
"Being able to excel in telling your value creation story will therefore be an increasing source of competitive advantage - that's the main conclusion we have drawn from talking with senior business leaders across the world, supported by dialogues, research and other data. We are grateful to the many chairmen, CEOs, CFOs, investors and others who have contributed to this report, the guide and the toolkit."
Specifically, executive perceptions reveal that the value in understanding value creation can help to:
Value is no longer created only within the boundaries of a company. The value creation process crosses organisational and geographical boundaries through connecting numerous value drivers many of which are now intangible. This requires good information to inform good decision making and a clear strategy and business model - all of which rely on internal cohesion created through a clear understanding of what the organisation is seeking to achieve and how.
Responding to these challenges and opportunities requires companies to:
Global companies must create value for the short, medium and long-term. But they are doing this in an environment where there is a general lack of trust in businesses; pressures favouring immediate rewards; and the need to integrate many different sources of value spanning borders, cultures and generations.
Over the last 30 years there has been a shift in macroeconomic value to a position now where most of the market value of companies lies in intangible assets. Yet many of the practices and processes that account for a company's assets do not reflect this shift.
Increasingly, businesses are expected to report not just on profit but on their impact on the wider economy, society and the environment. There are numerous other reporting requirements, guidelines and standards in place - but none operate across the breadth of the business and its external context.
Integrated Reporting is a process founded on integrated thinking that results in a periodic integrated report by an organisation about value creation over time and related communications regarding aspects of value creation. An integrated report is a concise communication about how an organisation's strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term.
A total of 393 responses were received from CFOs, CEOs and COOs from across the globe, providing a valuable insight into the demands of the evolving reporting landscape and the potential benefits of Integrated Reporting.
