The Malaysian Institute of Accountants (MIA) is a key advocate for integrated reporting in the Malaysian capital market.
We have helped raise the profile of <IR> in Malaysia, since <IR> was identified as the way forward for effective disclosure of non-financial information in the Corporate Governance Blueprint 2011.
<IR> milestones and drivers include the formation of the Integrated Reporting Steering Committee under MIA to drive <IR> development. Importantly, <IR> was proposed as one of the exemplary practices in the Public Consultation Paper of the Malaysian Code on Corporate Governance 2016 (MCCG), and it was subsequently incorporated in the MCCG.
Currently, <IR> awareness remains nascent, and MIA is working hard to remedy this. Our joint MIA-ACCA Integrated Reporting Survey in 2016 found that 51% of respondents reported no or little knowledge of <IR> while just 13% have good or in-depth knowledge. On the bright side, 51% wish to learn more about <IR>, and we have hosted conferences and one-to-one engagement sessions with companies to achieve a critical mass of around 35 PLCs that are either starting to practice <IR>, or are committed to adopting it in the future.
MIA has always believed that we ourselves have got to walk the talk if we want to drive greater adoption of <IR> in Malaysia. The Survey identified perceived costs of <IR> and lack of guidance on preparation as barriers to adoption. Hence in 2017, we embarked on our own inaugural MIA Integrated Report 2016/2017 to serve as a real-life <IR> model.
While each organisation will have its own individual journey to <IR>, these are the lessons that we can share from our experience.
One, the process was surprisingly much easier compared to producing a traditional and longer annual report. The concise format of <IR> enabled MIA to zoom in precisely on our business model and value creation story. We also prepared a structured framework and timeline to facilitate the <IR> process.
Two, tone from the top is critical. Right from the beginning, everybody in MIA’s senior management was involved in the <IR> process. We held a Business Model Workshop, where we clarified and refined our business model and strategic objectives. Throughout the process of gathering and writing the content, the CEO and Executive Directors contributed directly. The governing Council and the Internal Audit function provided oversight and identified potential disclosure risks. Many high-level eyeballs were involved in the final proofreading.
Three, we appointed a liaison from each business unit to champion <IR> and facilitate information gathering. This helped somewhat to break down the silos between and within the units, but we still have to work harder to overcome tunnel vision and instil connected strategic thinking. This is a moving target.
Four, we believe that our <IR> has genuinely enabled all stakeholders to understand MIA’s narrative and purpose. For our inaugural report, we told our story of 50 years of nation building, since we were established on 30th September 1967 under the Accountants Act 1967. We sought to answer this question: how has MIA developed and regulated the profession to produce sufficient competent accountants to support the economy and society?
Importantly, our <IR> is a two-way communications tool that helps us to engage with our stakeholders and strengthen our strategic collaboration and our brand recognition. We are pleased to receive feedback from our stakeholders, both compliments and constructive criticism. For example, a former chief regulator and MIA member recommended that we provide more information on practice review statistics in future, because audit quality is a key benchmark for MIA as the profession’s regulator.
Coming back to the survey, 54% of respondents said the widespread use of <IR> by companies in Malaysia would make it a more attractive place to do business. We hope that our <IR> will be a catalyst for further adoption, not just by PLCs but also SMEs that are the backbone of the economy and market, especially now that <IR> is a recommended best practice in the MCCG. Through <IR>, MIA hopes to escalate Malaysia’s competitiveness and hence, deliver on our purpose of nation-building.