Accountants and
Integrated Reporting
Stathis Gould, IFAC
IFAC
• 175+ professional accountancy organization members in
130+ jurisdictions
• Focus:
– Contributes to & promotes development, adoption &
implementation of high-quality international standards
– Prepare a future-ready profession
– Speak out as the voice for the
global profession
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IFAC Membership
• Globally-recognized hallmark of a high-quality PAO
• Indicates credibility, sustainability & standing
• Demonstrates commitment to:
– International standards adoption
& implementation
– Best practices
– Public interest
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Thinking about the Future
Significant Change in Context
Prolonged and extreme uncertainty
Recessionary environment
New and emerging risks
Impacting Business
Accelerated business model transitions
Virtual & agile operating models the norm
New working practices
Impacting Finance and Accounting
Finance function and accounting priorities
Information and insights needed
Preparation for future uncertainties
Future-Fit Accountants
• Delivering what boards, management, operations
need to steer towards and communicate about
enterprise value creation and corporate impacts -
enabling confidence and credibility
• Ensure organizations understand and consider all
the factors that impact its ability to continue to
operate and create value into the future
Thinking Like a Chief Value Officer
• CVO represents the evolution from financial capital to value creation
• Positioned centrally in enabling or driving integrated thinking and
reporting
• Managing priorities for resource allocation, performance and
accountability across all value drivers covering
• Financial information
• Alternative performance & non-GAAP measures
• Non-financial information
• Intangibles
• ESG
• Sustainable development and the SDGs
Integrated Reporting
• Value creation reporting - a
process Long-term
• Integrated thinking value creation
• Multicapitals
• Wider stakeholder perspective
and a capital markets focus
• The integrated report
Different starting points in Integrated Integrated
different companies thinking reporting
IIRC website https://integratedreporting.org
Thinking About Value Creation More Broadly
Accounting for value creation – why and what it involves
• Beyond financial performance and shareholder value
• Opportunities and risks related to long-term value creation
• Enabling integrated thinking and reporting, and sustainability
Driving the future CFO and finance team, and assurance agendas
• Providing insights on how value is created today, and in the future
• Enabling a value creating business and resilient business model
• Comprehensively tracking performance and value creation
• Providing confidence through assurance
= A broader mandate in value creation and protection
Rethinking Value Creation
The CFO and Finance Function Role in Value Creation
Rethinking Value Creation
webpage
Defining Value Creation
• A comprehensive value creation focus covers
financial reporting, drivers of market and
intrinsic value, and wider impacts
• Financial
o Traditional accounting perspective
measured by book value
• Business
o An investor’s perspective-the potential for
value creation driven by strategic &
intangible assets. A measure is the
market value compared to book value
• Societal
o Society’s perspective measured by
impacts on the external environment -
society and natural - that are not currently
reflected in cash flows
See: Rethinking Value Creation
webpage
Understanding • How value is defined by customers, investors and other
Value Creation stakeholders
• How value is created through the organization’s purpose,
strategy, business model taking into account all relevant
capitals
• How value is delivered to customers, governments and
society through responsible products and services, channels
to market, all at an appropriate cost and price
• How value is sustained by retaining and protecting value
internally and distributing value externally by reinvestment
and distribution to shareholders and society
Integrated Reporting Must Haves
• Stakeholder dialogue
• Materiality
• Value creation model
• Multidisciplinary teams and
integration across
departments
• Clear reporting processes,
CFO/controller involvement
and assurance
• Commitment from
CEO/CFO and validation by
management/board
Data-Driven Integrated Thinking and
Reporting
• Understanding and judgment based on relevant quality data
and analysis
• Data and KPIs to track how an organization creates value
• Tools and statistical models and analysis relating to multiple
capitals – historical and future (scenarios/sensitivity analysis)
• Data that identifies relationships, correlations and causation
between different drivers of value
• Accountants need to lead on data ownership, accountability and
analysis related to non-financial capitals
• Data collection, processes and systems
• On a par with financial information
• Relevant data and insights needed for
o Performance reporting / scorecards –
targets and KPIs, impact measurement
Accountants o Risk management
enhance o Business and financial planning,
budgeting and forecasting
decisions & o Capital investment appraisal
o Financing
reporting o External reporting and communication
o Integrated and robust management
information leads to better reporting
Confidence in integrated reports through reasonable
assurance or limited assurance (review procedures)
involving the evaluation of processes, systems and
data
• Application of global standard ISAE 3000 (including other
relevant ISAEs) – code of ethics, independence, and
quality control
• Professional accountants have the specialist knowledge
Assurance and competence in assurance through extensive training
and practical application, and comply with independence
requirements
• Research shows that companies who obtain sustainability
assurance from an accounting firm can gain a 0.7%
reduction in their cost of capital and a rise of 5.8% in
analyst coverage over 12 months
• Bring expertise in evaluating internal systems/processes for
collecting, analyzing and reporting information which can be
supplemented with other subject matter expertise where
needed
Enhancing Corporate Reporting: The
Way Forward
• IFAC calls for a new Sustainability Standards Board alongside
the IASB
• A new standard-setting board is necessary to build and
coordinate interconnected financial and non-financial reporting
• Responding to the demand from investors, policymakers and
others for reporting that delivers consistent, comparable,
reliable and assurable information
• The IFAC roadmap https://www.ifac.org/knowledge-
gateway/contributing-global-economy/discussion/enhancing-
corporate-reporting-way-forward
www.ifac.org
@InternationalFederationOfAccountants @IFAC @International Federation of Accountants
Copyright © 2019 by the International Federation of Accountants (IFAC).
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