The International Integrated Reporting Committee (IIRC) calls for a new approach to corporate reporting in a discussion paper released Monday.
The paper, Towards Integrated Reporting: Communicating Value in the 21st Century, discusses the rationale for integrated reporting, offers initial proposals for the development of an international integrated reporting framework, and outlines next steps toward its creation and adoption.
The goal of the paper is to solicit input from stakeholders. The IIRC will conduct a pilot program in October to “road test” the new framework.
According to the IIRC, integrated reporting would allow organizations to release more inclusive and useful reports on all aspects of performance, including environmental, social and governance, as well as economic, in a concise and user-friendly format. The inclusion of this information would allow organizations to provide a more comprehensive assessment of their long-term viability, as well as meet the emerging information needs of investors and other stakeholders.
“The range of issues—economic, environmental and social—which determine an organization’s success has never been broader or more pressing,” said Sir Michael Peat, chairman of the IIRC, in a news release. “It is for this reason that we need an approach to reporting that is fit for purpose in the 21st century. The world has changed—reporting must, too.”
All matters that are important in assessing an organization’s performance and position, past and prospective, need to be reported, said Peat, “but not by making annual reports ever longer and more complex—they are too long already. The information needs to be provided clearly and concisely with the connections between financial, environmental and social impacts demonstrated and the clutter removed. This is what integrated reporting seeks to achieve.”
The IIRC’s discussion paper follows up on many of the themes and recommendations of the International Federation of Accountants’ (IFAC) Integrating the Business Reporting Supply Chain report.
“The IIRC’s approach is one that will present a globally coordinated solution to reporting, avoiding the current problems with reporting requirements in different jurisdictions developing in different directions and at different speeds,” said Mervyn King, deputy chairman of the IIRC, in the news release. “Integrated reporting reduces the compliance burden and enables more effective decision making for investors and other stakeholders.”
Comments on the IIRC paper are encouraged from various stakeholders, including reporting organizations, investors, policymakers, regulators, standard setters, employees, assurance providers, academics and the public. The deadline for comments is Dec. 14; they can be submitted to firstname.lastname@example.org or through theiirc.org.
The AICPA supports efforts to develop clearer, more consistent, globally accepted accounting and reporting standards, and encourages members to provide input on the IIRC draft document over the next three months.
“Many public companies and other organizations already compile this information in separate reports,” said Sue Coffey, AICPA senior vice president–Public Practice and Global Alliances, in a news release. “Pulling it together in a concise, interconnected way will provide value and transparency for investors assessing an organization’s strategy and performance. It also will help the organization to sustain its value over the long term.”
The IIRC was established in August 2010 by The Prince’s Accounting for Sustainability Project, the Global Reporting Initiative and IFAC to bring together a cross section of representatives from the corporate, investor, accounting, securities, regulatory and standard-setting communities to oversee the development of an integrated reporting model.
The committee and the AICPA jointly convened a June 2011 round-table discussion on integrated reporting at Bloomberg LP’s offices in New York and will co-host another session in Palo Alto, Calif., in November.
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