Integrated Reporting Must Complement a Company's Strategic Goals
Tilley, Charles, Financial Management (UK)
There is a growing momentum for change in corporate reporting, with each initiative seemingly calling for greater alignment between the information reported to users of corporate reports and that used internally by directors and managers for effective decision-making.
This broadening of the domain of the management accountant is something we at CIMA are already engaged with. I had the honour of being asked to sit on a Financial Reporting Council (FRC) advisory panel to examine ways of simplifying corporate reports, and am also a member of the International Integrated Reporting Committee, which looks at how organisations can produce reports that better integrate strategic, financial, environmental and social information. In addition, CIMA is participating in the Department of Business, Innovation and Skills' (BIS) review of narrative reporting.
The FRC project has the working title "Cut the Clutter". As the name implies, its aim is to identify information presented in corporate reports that obscures the key messages and to propose more engaging and effective ways to present the material. Producing effective "de-cluttered" reports requires a thorough understanding of both the business and the market in which it operates. It also demands an efficient management accounting information system to provide the source data and narrative content. The FRC's report on how financial reporting could be improved is available from its website (www.snipurl.com/27dhxs).
The International Integrated Reporting Committee (IIRC) has also been established to promote what it calls an "Integrated Report". This will require organisations to provide a concise, clear, comprehensive and comparable integrated reporting framework. This should be structured around the organisation's strategic objectives, its governance and business model, as well as integrating material financial and non-financial information.
The IIRC project has been driven by developments in South Africa under the auspices of Professor Mervyn King and the Prince of Wales' Accounting for Sustainability initiative. …