The Impact of Integrated Reporting

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Presentation given by Graham Terry, senior executive, strategy and thought leadership, South African Institute of Chartered Accountants, during the International Federation of Accountants (IFAC) integrated reporting seminar, A Fundamental Shift in Corporate Reporting, November 14, 2012.

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  • 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
  • The Impact of Integrated Reporting

    1. 1. THE IMPACT OFINTEGRATED REPORTING IFAC ANNUAL SEMINAR – A FUNDAMENTAL SHIFT IN CORPORATE REPORTING Presented by Graham Terry Senior Executive: Strategy and Thought Leadership
    2. 2. Components of Market Value S&P 500 Physical and financial assets Other assets 17 32 68 80 81 83 68 32 20 191975 1985 1995 2005 2009 Source: Towards integrated reporting - Communicating Value in the 21st Century – International Integrated Reporting Council
    3. 3. Increasing length and complexity Source: Investis research - PwC
    4. 4. “Corporate reporting …has got too big, toocumbersome andincomprehensible …” Source: Tomorrow’s Corporate Reporting : A Critical System at Risk – CIMA and PwC
    5. 5. King IIISouth Africa
    6. 6. Integrated Reporting Framework
    7. 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
    8. 8. Integrated Thinking
    9. 9. Research & awards
    10. 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 risksSome trends
    11. 11. 78% of companies used the term Annual Integrated ReportIRC ResearchConducted by - College of Accounting, University of Cape Town
    12. 12. 60% of Boards endorse Integrated ReportsIRC ResearchConducted by - College of Accounting, University of Cape Town
    13. 13. 57% of reports - to be read by stakeholders other than investorsIRC ResearchConducted by - College of Accounting, University of Cape Town
    14. 14. 17% shorter than 100 pagesIRC ResearchConducted by - College of Accounting, University of Cape Town
    15. 15. International Position
    16. 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 exchangesInternational Integrated Reporting Council
    17. 17. Pilot programme
    18. 18. Examples Database
    19. 19. Assurance improves credibility ofReport
    20. 20. Thank You

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