CEO Management Accounting, Association of International Certified Professional Accountants
Executive Vice President Public Practice, Association of International Certified Professional Accountants
For many businesses, financial and non-financial assets have become the most important determinants of long-term value creation. That’s because ultimately, virtually all current "non-financial" information finds its way into future financial outcomes.
This development has prompted ever louder calls for a change in the way businesses report and communicate the value they create.
The work of the IIRC has responded positively to this need for a new reporting model that reflects the rapidly changing business environment. It has raised the issue of integrated reporting with business leaders and the accounting community, giving it the priority it rightly deserves.
At the Association we believe that it is time for the wider corporate sector to start accounting for the business as a whole, rather than just the balance sheet.
Our belief in and commitment to this is shown by our endorsement of the IIRC - we have been involved in its work since its inception through both the Chartered Institute of Management Accountants (CIMA) and the Association of International Certified Professional Accountants, and we continue to play an active role in promoting it. That is because accountants and finance professionals are central to driving this necessary change in corporate reporting. What is more, they already have the training and expertise to implement it.
The finance function embodies the spirit of integrated reporting because it too gathers information from all parts of the organization to create a picture of where value lies. Integrated reporting takes this one stage further, looking to uncover the intangible value while encouraging greater reflection on how the business creates value, and not only the value itself. That alignment also means there is a pathway for finance professionals to take their place alongside senior leadership.
We have moved to embed this link more explicitly in our syllabus, recognizing integrated reporting and its growing global prominence. It features in our professional learning for current and future management accounting practitioners. The 2019 CIMA Professional Qualification Syllabus includes the IIRC and the International <IR> Framework. This is then mirrored in the Chartered Global Management Accountant (CGMA) Competency Framework (2019 edition) that is designed to help management accountants and their employers understand the knowledge requirements and assess the skills needed for both current and desired roles.
As we move into the second decade of the IIRC, we do so in an even more disrupted world. However, it does present an opportunity for integrated reporting to really take hold, as the concept is well suited to a volatile, multi-layered, multi-stakeholder business environment, where being nimble is a critical strength. It is a world where tangible value is less visible and new universal metrics are needed to demonstrate how a business contributes not only to its shareholders but also to its multiple stakeholders and beyond.
The IIRC has already shown its own change-readiness, consulting this year on the future shape of the framework. This is a solid step towards creating a consistent international standard which we believe will make integrated reporting more appealing to those organizations that have yet to commit to it.
Uncertainty has always been part of doing business. The difference we see at this time, is that uncertainty has never been more prominent. Being as equipped as possible to make decisions in this environment is an excellent countermeasure. Integrated reporting provides this. As we enter the next phase of the IIRC’s mission, it looks like its time has come.