Integrated Reporting for Small- and Medium-Sized Entities in Africa, SAIPA

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Presentation given by IFAC Executive Director, Governance and Operations, Alta Prinsloo at the South African Institute of Professional Accountants National Conference. Presentation details the current status of integrated reporting globally and in Africa and how the issue is playing out for small- and medium-sized entities (SMEs).

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Integrated Reporting for Small- and Medium-Sized Entities in Africa, SAIPA

  1. 1. Integrated Reporting for SMEsin AfricaSAIPA National ConferenceJuly 11-13, 2012Alta PrinslooExecutive DirectorInternational Federation of Accountants Page 1 | Confidential and Proprietary Information
  2. 2. Overview• Reporting today… and tomorrow• South Africa taking the lead• International developments• The Integrated report• Integrated reporting• Relevance to SMEs• SME action plan• SAIPA action plan• Resources Page 2 | Confidential and Proprietary Information
  3. 3. Reporting today… BUSINESS VALUE REPORT CONTENT strategic issues strategy & governance plans / forecasts / targets implementation plans past performance business as usual Page 3 | Confidential and Proprietary Information
  4. 4. Page 4 | Confidential and Proprietary Information
  5. 5. ... and tomorrow Thinking: Isolated  Integrated Stewardship: Financial capital  All forms of capital Past and future, connected, Focus: Past, financial  strategic Timeframe: Short term  Short, medium and long term Trust: Narrow disclosures  Greater transparency Responsive to individual Adaptive: Rule bound  circumstances Concise: Long and complex  Concise and material Technology enabled: Paper based  Technology enabled Page 5 | Confidential and Proprietary Information
  6. 6. South Africa taking the lead• King III (2009) – “… we need a fundamental shift in the way companies and directors act and organise themselves” – Integrated reporting represents an important element of this “fundamental shift” – It is a significant and timely evolution in corporate reporting practice• Johannesburg Stock Exchange (JSE) Listings Requirements, effective March 1, 2010 Page 6 | Confidential and Proprietary Information
  7. 7. South Africa taking the lead• Integrated Reporting Committee (May 2010) – Association for Savings & Investments South Africa – Business Unity South Africa – Institute of Directors in Southern Africa – JSE Ltd – The South African Institute of Chartered Accountants – Banking Association South Africa – Chartered Secretaries Southern Africa• Framework for Integrated Reporting and the Integrated Report – Discussion Paper (January 2011) Page 7 | Confidential and Proprietary Information
  8. 8. International Integrated Reporting Council (IIRC) Page 8 | Confidential and Proprietary Information
  9. 9. Companies Investors• Corporate networks – GE, Natura • Investor networks – APG – WBCSD – EDF, 100 Group – UN PRI – EFFAS – UN Global Compact – Novo Nordisk – UNEP-FI – Hermes EOS – BSR – China Light & Power – ICGN – Mercer – CERES – Nestlé, WPP – INCR – French government – Global Alliance – HSBC – Aviva Investors fund – WEF – Tata – Microsoft IGOs and Accounting • UNCTAD • CIMA, ICAEW • World Bank • PwC, E&Y, GT, Deloitte, • IFAC, ACCA KPMG, BDORegulators, Standards • JICPA, SAICASetters and Stock Exchanges• IASB • Tokyo Stock Exchange Civil Society, Academia• FASB • London Stock • WWF • Transparency• GRI Exchange International • WRI• CDSB • Financial Stability Board • Harvard University • A4S• IOSCO • Volans • Uni. Sao Paolo • Uni. New South Wales Page 9 | Confidential and Proprietary Information
  10. 10. International Integrated Reporting Council• Discussion Paper: Towards Integrated Reporting – Communicating Value in the 21st Century (September 2011)• On track to publish International Integrated Reporting Framework in 2013• Pilot program Page 10 | Confidential and Proprietary Information
  11. 11. The integrated report …• Is not a reporting by-product• Is not an extract from the traditional annual report• Is not a combination of the AFS and sustainability report• Needs to flow from the heart of the entity• Tells the overall story of the entity• Focuses on what is relevant and material• Contains positive and negative issues and challenges• Is concise and written in clear / understandable language• Is the entity’s primary report to stakeholders Page 11 | Confidential and Proprietary Information
  12. 12. The integrated report …• Provides an overview of how an entity demonstrates stewardship and creates and sustains value• Brings together material information about an entity’s strategy, governance, performance, and prospects in a way that reflects its commercial, social, and environmental context Page 12 | Confidential and Proprietary Information
  13. 13. The integrated report – a strategic lens Page 13 | Confidential and Proprietary Information
  14. 14. The integrated report – guiding principles andcontent elements Page 14 | Confidential and Proprietary Information
  15. 15. Integrated reporting• The integrated report is a product of integrated reporting• Integrated reporting is a process• The integrated reporting process requires integrated thinking and, ultimately, integrated management Page 15 | Confidential and Proprietary Information
  16. 16. The integrated reporting process Page 16 | Confidential and Proprietary Information
  17. 17. Why is it relevant to SMEs?• From small to giant entities – Microsoft – Hewlett-Packard – Google – Volkswagen Page 17 | Confidential and Proprietary Information
  18. 18. Why is it relevant to SMEs?• SMEs are the growth engine of economies – They create jobs – They spur innovation – They create new products – They are essential to a competitive and effective market – They are critical for poverty reduction – They play a particularly important role in developing countries Page 18 | Confidential and Proprietary Information
  19. 19. An SME perspective• The principles are applicable regardless of size• SMEs are likely to have fewer silos and a greater degree of integrated thinking – Application of the principle of connectivity should be easier• Although the integrated report is primarily aimed at investors, it is of benefit to other stakeholders – Entities / individuals significantly affected by the entity’s activities, products and services – Entities / individuals whose actions affect the entity’s ability to successfully implement its strategies Page 19 | Confidential and Proprietary Information
  20. 20. Through integrated reporting, SMEs will …• Enhance strategies• Understand how strategy affects / is affected by environmental, social, financial, and economic issues• Enhance risk management• Explore new and innovative opportunities in their products, services, processes, and markets• Improve strategic decision-making• Improve performance Page 20 | Confidential and Proprietary Information
  21. 21. Through integrated reporting, SMEs will …• Enhance reputation among stakeholders• Gain trust from funders / lower cost of capital• Become more competitive in the market place, enhance brand value, and improve customer support• Experience lower employment costs and better employee loyalty Page 21 | Confidential and Proprietary Information
  22. 22. SME action plan• Integrated reporting is a journey 1. Get organized 2. Plan your integrated reporting process 3. Engage with stakeholders 4. Identify report content 5. Assess systems 6. Prepare the report 7. Hold constructive dialogues Page 22 | Confidential and Proprietary Information
  23. 23. SAIPA action plan• Increase awareness of integrated reporting in SMEs• Equip members to assist SMEs in the journey• Facilitate stakeholder dialogue• Develop / contribute to the development of implementation tools for SMEs Page 23 | Confidential and Proprietary Information
  24. 24. Resources• International Integrated Reporting Council – discussion paper and additional resources at http://www.theiirc.org/• IFAC Sustainability Framework http://www.ifac.org/paib• Global Reporting Initiative – Support for SMEs https://www.globalreporting.org• Look at good examples for inspiration, e.g., Impahla Clothing, Beyond Business http://www.b-yond.biz/• CICA, CIMA, AICPA SME case studies http://www.aicpa.org/InterestAreas/BusinessIndustryAndG overnment/Resources/Sustainability Page 24 | Confidential and Proprietary Information
  25. 25. www.ifac.org

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