Professional management accounting association IMA (Institute of Management Accountants) responded to the International Integrated Reporting Council’s International Integrated Reporting Framework, released Monday, with an outline of several actions.
The IMA’s official comment letter, available here, addresses how to transform corporate reporting to better serve the public interest.
“IMA and the IIRC are in complete agreement that disclosures must be improved in order to better inform investors and other key stakeholders about the sustainable value creation capacity and capability of enterprises,” said Jeff Thomson, president and chief executive officer of IMA, in a statement. “To realize the benefits of IR, we must define our goals, adopt better technological standards, embrace a learning and growth approach, market-by-market, and shift our short-term financial focus. IMA also applauds the IIRC’s due process in reacting to issues from the April 2013 Consultation Draft exposure process.”
In its original comment letter on June 17, 2013, the IMA listed four issues that must be addressed to see the benefits of International Integrated Reporting, including clarification of its end goal, value assessments, approach to step changes and technology enablement.
In full, as quoted in the letter, the issues were:
1. The end goal should not be to produce a single, integrated report. It should be to motivate disclosures that better inform investors and other stakeholders as to the sustainable value creation capability and capacity of the organization. A good first step would be to clarify and simplify existing disclosures. It may turn out that interlinked or interconnected reports will produce a higher ROI for investors.
2. The ROI and “proof of concept” assessment of IR should shift more to actual value delivery participants (e.g., business owners, business managers, CFOs, preparers, investors, analysts) relative to value chain observers and monitors (e.g., academics, consultants and regulators). This will help develop the required market evidence.
3. A “learning and growth” approach should be taken to IR with tangible step changes such as improving MD&A disclosures, motivating more concise and informative financial reports including reporting on intangibles, creating better connections to the overarching “strategy story” and supporting new sustainability/ESG frameworks such as GRI (GRI issued the next generation, “G4,” of its guidelines on May 22, 2013 in Amsterdam). Mandatory reporting is not recommended and history has often shown it results in a social tax.
4. Technology enablement including XBRL/structured data standards could play a role to potentially improve the cost/benefit of IR. In IMA's May 2, 2013 webinar with nearly 1,000 global participants, the responses to the question "which is the most significant barrier to IR in your organization" were: 13 percent weak external drivers; 21 percent lack of appetite from the top; 20 percent strong organizational silos; 32 percent patchwork of IT programs/legacy systems; and 14 percent other.
IMA also argues a case for jurisdiction-specific working groups, including one in the United States, to create a sense of urgency in corporate reporting and embrace a market-by-market learning and growth perspective.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access