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).

1. Integrated Reporting for SMEs
in Africa
SAIPA National Conference
July 11-13, 2012
Alta Prinsloo
Executive Director
International Federation of Accountants
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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
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3. Reporting today…
BUSINESS VALUE REPORT CONTENT
strategic issues
strategy & governance
plans / forecasts / targets
implementation plans
past performance
business as usual
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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
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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
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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)
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8. International Integrated Reporting Council (IIRC)
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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, BDO
Regulators, Standards • JICPA, SAICA
Setters 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
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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
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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
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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
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13. The integrated report – a strategic lens
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14. The integrated report – guiding principles and
content elements
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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
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16. The integrated reporting process
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17. Why is it relevant to SMEs?
• From small to giant entities
– Microsoft
– Hewlett-Packard
– Google
– Volkswagen
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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
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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
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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
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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
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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
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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
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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
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25. www.ifac.org