Integrated Reporting is having a profound impact on corporate thinking and reporting. Value is being assessed on the basis of the sources of value creation used by an organisation and not through a financial lens alone. In Chief Value Officer: Accountants Can Save the Planet, Mervyn King, a global corporate governance and reporting leader, challenges some of the systemic issues preventing organisations from managing in an integrated value-creation way. This is a presentation that we covered during our CFO forum meeting

3. Once registered a company becomes an inanimate &
incapacitated person. The directors animate the company!
• No mind of its own
• Sovereign
• Immortal
• No owner of company
• Company owner of assets and
its own liabilities
• Tangible and intangible assets

4. Ownerless company
The ultimate and exclusive right conferred
by a lawful claim or title, and subject to
certain restrictions to enjoy, occupy,
possess, rent, sell, use, give away, or even
destroy an item of property.

5. Ownerless company
No shareholder can use,
waste or destroy any
asset of a company!

6. Ownerless company
Average shareholding in the UK:
• 1960’s 5 years
• 2008 3 Months
• 2016 22 Seconds
Sikka 2016

7. Ownerless company
The company
becomes a legal
person who cannot be
owned according to
law

8. The primacy of the shareholder
The shareholder
becomes one of the
stakeholder groups
that needs equal
consideration

9. Director’s Duties

10. Director’s Duties

11. Value creation
• Ethical culture and effective leadership
• Performance and value creation in a
sustainable manner
• Adequate and effective controls
• Trust, good reputation and legitimacy

12. Value creation model

13. Components of market value Listed
companies end of 20th Century
AFS30%
70%
Market Capitalization
Book Value
Intangible
Assets Investor’s
Value

15. 83
68
32
20 19
17
32
68
80 81
1975 1985 1995 2005 2009
S&P 500
Physical and financial assets Other assets
Components of market value

16. From financial reporting to
corporate reporting

17. Intangible Assets
• Long-term strategy to maintain value creation
• Company Reputation
• Company supply chain
• Supply chain code of conduct
• Stakeholder relationships
• How the company generates income and its impact
• Enhancement of positive impacts
• Diminishment of negative impacts
• Quality of governance
• Quality of risk management
• Internal controls

18. IR Content
• Organizational overview and external environment
• Governance
• Business model
• Risks and opportunities
• Strategy and resource allocation
• Performance
• Outlook
• Basis of preparation and presentation and in doing so, takes
account of: I General reporting guidance
The International <IR> Framework
The International Integrated Reporting Council (IIRC)

19. <IR> Scope boundary

20. Accountants’ relevance:
• Designer of the accounting system
• Education of accounting students
• Not only focus on financial capital

21. Chief Value Officer
• Guides board in prepping <IR>
• Guides decision making process of the board
• Integrated thinking – holding opposing ideas in
constructive tension
• Aid in maximizing corporate value over al 6
capitals
• Saving the planet