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PwC Finds Client Demand for Integrated Reporting

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By Michael Cohn
August 27, 2013

PricewaterhouseCoopers is seeing more companies expressing an interest in looking beyond their basic financial results so they can develop new frameworks to provide a more informative view of their business.

PwC’s new report, “Integrated Reporting: Going beyond the financial results,” describes how some companies are examining different approaches to reporting non-financial key performance indicators, such as strategy, governance, performance, sustainability and prospects, and how to create more value from them. The report finds that companies can benefit from thinking about their internal and external reporting in an integrated way by taking into account such factors. Companies that use integrated reporting concepts may also produce more transparent reporting and thereby improve their access to capital.

The International Integrated Reporting Council released a draft version in April of its integrated reporting framework and a number of companies have been pilot testing it (see Integrated Reporting Pilot Testers Compare Progress). Meanwhile, groups such as the Sustainability Accounting Standards Board have been focusing on areas of integrated reporting such as environmental sustainability (see SASB Releases Sustainability Accounting Standards for Health Care Sector).

Kathy Nieland

In PwC’s view, integrated reporting should build on the existing financial reporting model to present additional information about a company’s strategy, governance and performance.

Integrated reporting provides a more complete picture of a company, including how it demonstrates stewardship and creates and sustains value. Integrated reporting is achieved when it shows how governance connects with remuneration and risk, when strategy is designed to exploit a changing market environment, and when strategic priorities align with key resources, relationships and key performance indicators.

PwC’s report notes that while SASB standards are currently provisional, stakeholders are increasingly asking companies to provide clear information about external drivers affecting their businesses, their approach to governance and managing risk, and how their business models work. Investors are taking note, recognizing the relationship between sustainability and financial performance and are increasingly considering non-financial factors such as resource scarcity when assessing companies’ long-term prospects. Companies can use integrated reporting concepts to drive the need for transparency, while also focusing on integrated thinking and strategic decision-making.

“We’re working with leading companies to look beyond their core financial results and develop a new framework that aims to give a more informative view of their businesses,” said PwC US Sustainable Business Solutions practice leader Kathy Nieland in a statement. “Companies that are engaged in integrated reporting have been able to successfully think about their businesses in new and innovative ways. Increasingly, companies are beginning to take on integration, incorporating sustainability and other non-financial information in their reports, and those that haven’t done so should take the time to look inward in order to prepare and gain valuable insights into their business.”

1 Comments

Maybe I'm a little overzealous when it comes to believing that the accounting profession could have recognized the economic trauma which was coming, or that they could have prepared their business clients for it. But I don't believe I'm very far off the mark in believing that not nearly enough "analysis" occurs in the typical public accounting engagement, and even when it does... is the suggested path the right one? I would submit that BI is new enough to so many people that it may not be. Learning what the numbers are telling you is one thing... staving off disaster is quite another.

http://coopermann.com/2013/08/22/predicting-outcomes-and-providing-guidance-being-nostradamus-proformative-com/

Posted by: joaniecmann | August 28, 2013 3:52 PM

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