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Getting Ready for the Statement of Future Value: A Visionary Look into the Future of Accounting

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Cornis van der Lugt - Leading corporates world-wide have experimented with different methodologies for capturing true value creation and developing alternative statements (such as green P&Ls and Social Balance Sheets) since the turn of the century. From this emerges the field of sustainability accounting as recognised discipline, alongside financial and management accounting. What would income statements and balance sheets look like if the results from alternative statements were to be integrated with mainstream filings? How would US and Global GAAP respond? What would a statement of Future Value look like? Having chaired an international expert group on the future of accounting over the last two years, Cornis will present their recently launched 3.0 Accounting Blueprint.

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Getting Ready for the Statement of Future Value: A Visionary Look into the Future of Accounting

  1. 1. Getting Ready for the Statement of Future Value: A Visionary Look into the Future of Accounting CORNIS VAN DER LUGT BSD Consulting and Stellenbosch University Business School @reporting3org
  2. 2. #NewMetrics #Reporting3 Statement of Future Value: A Visionary Look into New Integrated Accounting Cornis van der Lugt Lead Author | Accounting Blueprint Reporting 3.0 New Metrics Conference Philadelphia | 30 October 2018
  3. 3. #NewMetrics #Reporting3 !2 Presentation Overview • Origin: Evolution of Accounting into Three Sub-Disciplines • Recognized Comprehensive Accounting Principles (RCAP) • Expanded Statements (Past, Present) • Forward-Looking Statement & Narrative • A New Era of Integrated Accounting “When the market culture equates `profits with purpose` with a socialist agenda and criticizes thinking beyond the next quarter as incompetence, we’ve got some work to do… ” - comment on LinkedIn following announced resignation of Sacha Romanovitch as chief executive of Grant Thornton UK,Oct 2018
  4. 4. #NewMetrics #Reporting3 Accounting Evolution Financial P&L (1500s+) Environmental P&L (1990s+)Social Balance Sheet (1960s+)
  5. 5. #NewMetrics #Reporting3 Three Sub-Disciplines…
  6. 6. #NewMetrics #Reporting3 Intercapital, Integrated Accounting...
  7. 7. #NewMetrics #Reporting3 Recognized Comprehensive Accounting Principles (RCAP)
  8. 8. #NewMetrics #Reporting3 Multilayered Income Statement
  9. 9. #NewMetrics #Reporting3 Multilayered Balance Sheet
  10. 10. #NewMetrics #Reporting3 Diverse expectations of statements and narrative… • Users will need information about a company’s intangibles—strategy, business model or technical know-how—many of which currently are not recognized in the financial statements. Hans Hoogervorst, IASB Chair (2017) • ESG ratings we have today still really only give you a general feeling of performance, not a direct financial cost or benefit. Susana Penarrubia, Deutsche Asset Management (2017) • The biggest factors that limit the use of non- financial information by investors include lack of appropriate quantitative ESG information; lack of comparability over time; and questionable data quality. CFA Institute (2017) • Many of these intangibles are hard to value, have costs that are difficult to track and may not even be controlled by the entity, which are all good reasons for not recognising them as assets… it may well be that reporting such information outside the financial statements will be more effective at communicating the development of a business… ACCA (2018) • The “science” typically include a multitude of tools to support the quantification and monetization of risks... The “art” is the analysis and decision-making based on intuition, expertise and a holistic view of the organization. WBCSD (2017)
  11. 11. #NewMetrics #Reporting3 Pushing the boundaries in two directions…
  12. 12. #NewMetrics #Reporting3 Pushing the boundaries in two directions…
  13. 13. #NewMetrics #Reporting3 Statement of Long-Term Risks, Assets & Liabilities (20+)
  14. 14. #NewMetrics #Reporting3 A New Era of Integrated Accounting…
  15. 15. #NewMetrics #Reporting3 Thank You! Cornis van Der Lugt Lead Author | Accounting Blueprint Reporting 3.0 Senior Research Fellow Stellenbosch University Business School South Africa Senior Associate BSD Consulting Zurich, Switzerland
  16. 16. #NewMetrics #Reporting3 ANNEX: Accounting Working Group (2017-2018) • Prof. Carol Adams: Durham University Business School • Wim Bartels: KPMG The Netherlands • Prof. Thomas Berndt: IFF-HSG, St Gallen University • Claudine Blamey: The Crown Estate • Alexsandro Broedel Lopes: Unibanco Itau Brazil • Andrew Collins: Sustainability Accounting Standards Board (SASB) • Prof. Jeffrey Hales: Georgia Tech University • Paul Hurks: Royal Netherlands Institute of CAs (NBA) • Andre Jakobs: ABN Amro • Tatiana Krylova: UNCTAD Expert Group on International Standards of Accounting and Reporting (ISAR) • Tjeerd Krumpelman: ABN Amro • Shari Littan: Thomson Reuters • Zimkita Mabindla: South African Institute of CAs (SAICA) • Richard Martin: Assn of Chartered Certified Accountants (ACCA) • Mark McElroy: Center for Sustainable Organizations • Michiyasu Nakajima: Kansai University • Giorgio Miguel Saavedra: World Bank (IBRD, IDA) • Jeremy Nicholls: CEO, Social Value International, UK • Prof Rene Orij: Nyenrode Business University, The Netherlands • Neil Smith: AEGON Insurance & Asset Management • Imad Terrahi: AEGON Insurance & Asset Management • Anne Thomas: The Crown Estate • Dr CT van der Lugt: Stellenbosch University Business School • Kenneth Weldin: PKF Australia • Yuki Yasui: UNEP Finance Initiative

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