Better reporting leads to improved decision-making, strategic clarity


By Neil Amato

The quality of a company’s reporting can enhance its reputation amongst investment professionals and provide more strategic clarity to stakeholders, according to research released Wednesday.

Two studies point to evidence that integrated reporting can have a positive impact on governance as well as the bottom line.

The International Integrated Reporting Council (IIRC) released research from 66 organisations in its pilot programme. The organisations helped develop and test the International Integrated Reporting Framework, which was published in December 2013. Another report, released by PwC, a partner in the IIRC pilot programme, took the responses of investment professionals around the world.

An integrated report is a concise communication about how an organisation’s strategy, governance, performance, and prospects, in the context of its external environment, lead to the creation of value in the short, medium, and long term.

The PwC report found that 63% of investors believe the quality of a company’s reporting – including information on strategy, risks, and other value drivers – could have a direct impact on the company’s cost of capital. And 80% say the perception of the quality of a company’s reporting has an effect on the perception of that company’s management.

Eighty-seven per cent of companies in the IIRC pilot programme who have published at least one integrated report believe investors better understand their strategy. Companies using integrated reporting also reported improvements in decision-making (79%), better collaborative thinking by the board about goals and targets (78%), and a better understanding of risks and opportunities (68%).

The research was released Wednesday in Madrid, the site of the fourth annual IIRC Pilot Programme Conference, which marks the transition from the testing phase of integrated reporting to adoption of integrated reporting principles. The IIRC said it has formed the IR Business Network to employ the framework released last year.

Related CGMA Magazine content:

Opinion: Accountants at the Forefront of Change”: Investors continue to rally for reduced information overload. Paul Druckman, CEO of the International Integrated Reporting Council, offered a call to action last year.

International Forum Aims for Cohesion in Corporate Reporting”: Organisations with key roles in corporate reporting have formed an international forum to promote coherence, consistency, and comparability.

Neil Amato (namato@aicpa.org) is a CGMA Magazine senior editor.

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