Reporting is critical in explaining how a business creates value. Being able to excel in telling your value creation story will be an increasing source of competitive advantage. <IR> is far more than just a reporting framework, as it helps a company create value as well as tell the story of how value is created more effectively in order to win trust and secure reputation.
So, what do senior executives currently think about corporate reporting? What are the current perceptions of Integrated Reporting <IR> as a desirable reporting framework?
In July 2014, members of the Chartered Institute of Management Accountants (CIMA) and the American Institute of CPAs (AICPA) took part in a brief survey designed to further advance and aid developments in corporate reporting and the communication of value creation. More than 350 executives responded comprising of CEOs, CFOs and COOs located in North America, Africa, Asia-Pacific and Europe.
The results of the survey provide valuable insights for both the authors and audiences of corporate reports.
- 94% of executives feel that it is important to be able to effectively explain value creation through their corporate reporting.
- Executives consider that the value creation discussion is most beneficial for investors (80%) and employees (68%). Customers (46%) and creditors (42%) are also seen as beneficiaries of the value creation discussion.
- The general view from executives is that their current focus for strategic planning is too short. The majority of executives are using a mid-term strategic planning horizon of 2-3 years. However, most executives would prefer to adopt a more long-term view of how their business operates through using planning horizons of 4-5 years and over.
- Although only a minority of executives agree that their current reporting fails to meet both their internal decision-making needs (25%) and external stakeholder information needs (12%), well over half believe that there is room for improvement.
- Executives are very positive about the potential benefits of bringing together financial and non-financial information, with very few feeling that there are no benefits.
- Awareness of <IR> in the business world is still developing, with 63% of executives acknowledging that they had heard of <IR>. Although awareness of <IR> is still moderate, the majority of executives see the potential of <IR> to deliver success for their business.
- Despite the acknowledgement of the benefits of <IR>, the vast majority of executives have not made any concrete plans to adopt <IR> within a given period of time. Of those who have, the majority intend to do so in the next 2-3 years.
Gain a competitive advantage - how to introduce <IR> to your business
- Read the CGMA briefing on Integrated Thinking to find out how Integrated Reporting can help your organisation make better decisions.
- The guide and toolkit Using integrated reporting to help create value and effectively tell the full story assist executives facilitate and lead a discussion within organisations and within boards on how integrated reporting can help their business.