IIRC FINANCIAL STATEMENTS 2017 / Notes to the financial statements

Notes to the financial statements

1. Statement of compliance with International Financial Reporting Standards (IFRS)

Basis of preparation

The IIRC’s financial statements have been prepared in accordance with IFRS as adopted by the European Union and applicable law. The financial statements have been prepared under the historical cost convention as modified for financial assets carried at fair value and on the going concern basis. The principal accounting policies adopted by the IIRC are set out in Note 2. The policies have been consistently applied to the entire year presented, unless otherwise stated.

The functional and presentational currency of the IIRC is UK Sterling.

2. Accounting policies

Income recognition

Income is recognized to the extent that it is probable that the economic benefits will flow to the IIRC, and the income can be reliably measured. All such income is reported net of VAT where applicable.

Voluntary contributions from Council member organizations are recognized in income on receipt of funds.

Contributions from our network participants are recognized in income in the accounting period to which they relate.

Grants and other contributions are recognized in income in the accounting period to which they relate.

Training programme income consists of licence fees and <IR> training plan approval fees from training partners. The former is recognized over the course of the licence period. The latter is recognized once the training plan has been approved.

Events income is recognized in income upon completion of the event.

Foreign currency exchange

Transactions in currencies other than the functional currency of the IIRC are recorded at the rates of exchange prevailing on the dates of the transactions. At each statement of financial position date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the statement of financial position date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.

Gains and losses arising on retranslation are included in net surplus or loss for the period, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognized directly in equity.


Contributions from the Business Network participants, Council members and other organizations are not subject to corporation tax. The IIRC is required to pay corporation tax on net income from Training and Events, and any banking and investment income received in the year.

Trade and other receivables

Trade and other receivables are recognized by the IIRC based on the original invoice amount less an allowance for any uncollectible or impaired amounts. Other receivables are recognized at fair value.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank, cash in hand and short-term deposits. Short-term is defined as being three months or less.

Trade and other payables

Trade and other payables are initially measured at fair value, and subsequently measured at amortized cost, using the effective interest rate method.

Standards in issue not yet adopted

The financial statements have been prepared on the basis of accounting standards, interpretations and amendments effective from 1 January 2017. The IIRC has applied IFRS 15 — Revenue from Contracts with Customers in full for the complete period, earlier than its effective date of 1 January 2018. This Standard is applicable only to training programme income. The IIRC has concluded that there are no relevant standards or interpretations in issue not yet adopted which will have a material impact on its affairs.

Estimates and judgements

An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when they are identified as being bad.

3. Operating surplus

Operating surplus is stated after charging the following:

Auditor’s remuneration – audit services 8,000 7,750
Net foreign currency exchange loss/(gain) 7,267 (19,463)

4. Employee expenses

Wages and salaries 785,818 898,315
Post employment expense for defined contribution plans 34,014 31,435
Social security costs 93,352 109,072
913,184 1,038,822

The IIRC had an average monthly total of 29 staff members (2016: 29). 11 of these were employees (2016: 11), and 10 were seconded (2016: 13) by supporter organizations on a pro bono basis. In addition, eight consultants (2016: three) were engaged by the IIRC.

The average monthly number of employees during the year was made up as follows:

Executive 1 1
Other 10 10
11 11

5. Tax

Components of tax expense:

Current year 10,322 8,701
Changes in estimates to prior years (4,413)
5,909 8,701

6. Financial risk management objectives and policies

Senior management’s objectives when managing the financial capital are –

  • to safeguard the IIRC’s ability to continue as a going concern, to enable it to continue to meet its objectives; and
  • to maintain sufficient financial resources to mitigate against risks and unforeseen events.

The operations of the IIRC expose the organization to various financial risks, which are continuously monitored with a view to protecting the IIRC against the potential adverse effects of these financial risks.

Credit risk

Credit risk arises principally from cash and cash equivalents and trade receivables. The IIRC minimizes its exposure by dealing with independently rated banks with a minimum rating of ‘A’. The IIRC’s trade receivables relate primarily to its Network participants, training partners, Council members and other organizations. The IIRC has no significant concentration of credit risk, with exposure spread over a large number of organizations and countries throughout the world. Management reviews Business Network participants’ balances regularly to ensure that the risk of exposure to bad debts is minimized.

Liquidity risk

Council members and other organizations are invoiced at the start of the calendar year in respect of voluntary contributions. Network participants are invoiced for their annual contributions at the beginning of the annual cycle. Training partners are also invoiced in advance. The IIRC manages its liquidity risk by ensuring that it has sufficient working capital to meet its short-term operating requirements.

Management of liquidity risk is achieved by monitoring budgets, forecasts and actual cash flows. The number of network participants, training partners, Council members and other organizations that provide voluntary contributions are continuously monitored to ensure adequate funding.

Interest rate risk

The IIRC maintains surplus funds in a treasury bank account. The average interest rate on this bank account is negligible. Both the current account and treasury bank account are classified as short-term. Short-term is defined as being three months or less. For a change in interest rates of 1%, the gross interest earned would be negligible.

Currency risk

The IIRC monitors currency risk closely and considers that its current policies meet its objectives of managing exposure to currency risk.

7. Financial assets and liabilities

Financial assets and liabilities are carried at fair value.

Cash and cash equivalents 863,407 744,772
Trade and other receivables 230,657 317,373
Accruals 51,363 87,578
Trade and other payables 78,655 63,148

8. Trade and other receivables

Receivable from Business Network participants and others 230,657 317,373

The ageing of the trade receivables is as follows:

0-30 days 148,301 249,857
30-60 days 10,000 10,000
60-90 days 50,000 46,516
Greater than 90 days 22,356 11,000

Amounts receivable from Business Network participants, Council members and other organizations are non-interest bearing and are generally on 30-day terms.

Trade receivables of GBP 82,356 (2016: GBP 67,516) were past due but not impaired at the year-end. No allowance has been made for estimated irrecoverable amounts from network participants of (2016: GBP 10,000). The Directors consider the carrying value of trade and other receivables approximates to their fair value.

9. Trade and other payables

Payable to trade suppliers 48,655 31,363
Accruals 51,363 87,578
Deferred income 430,571 431,960
Payroll and indirect taxes 29,999 31,785
560,588 582,686

The ageing of the trade payables is as follows:

0-30 days 48,655 31,363
30-60 days
60-90 days
Greater than 90 days

10. Related parties

Related party transactions

The IIRC receives income from organizations with which we share key management personnel and are therefore deemed related parties. GBP 130,000 of voluntary contributions (2016: GBP 125,000), GBP 68,444 of grants (2016: nil) GBP 18,923 of network contributions (2016: GBP 10,000) and GBP 18,500 of training income (2016: GBP 10,000) from these organizations was recognized in income for the year ended 31 December 2017.

The IIRC is the sole member of the Integrated Reporting Foundation. Though the Foundation is an independent charity, as the body empowered to appoint the trustees the IIRC has significant influence over it and is therefore deemed a related party. A grant of GBP 200,000 from the Foundation to the IIRC was recognized in income in 2017 (2016: nil).

Key management compensation

One Director (2016: two directors, being the outgoing and incoming Chief Executive Officers) received remuneration which amounted to GBP 218,549 (2016: GBP 287,988) for the year ending 31 December 2017, of which GBP 18,062 (2016: GBP 3,062) relates to pension contribution.

The other Directors and Chair of the Council are not remunerated but may be reimbursed for out-of-pocket expenses incurred while undertaking work on behalf of the IIRC.