This article was first posted on IFAC’s Global Knowledge Gateway.
IFAC recently issued a policy position on integrated reporting highlighting the need for a single report providing a fuller picture of an organization’s ability to create value over time, and greater interconnectedness between different reports.
IFAC member organizations can utilize this policy in their own context to help communicate integrated reporting key messages with regulators and others, as well as encourage alignment of integrated reporting to current requirements for annual reporting.
But policy and advocacy is unlikely to be effective unless professional accountancy organizations (PAOs) are walking the talk by moving toward integrated reporting themselves.
The good news is that some PAOs are adopting integrated reporting to demonstrate leadership, and to better run their organizations and engagement with members and other stakeholders.
Integrated reporting provides the ideal framework to answer the question: How does your professional association or institute create value? Value for your members and students as well as value for others, including society more broadly?
At the last IFAC PAO Integrated Reporting Network webinar in March, five PAOs shared their integrated reporting journey: Association of Chartered Certified Accountants, Chartered Institute of Management Accountants, CPA Australia, Institute of Chartered Accountants of Namibia, and the South Africa Institute of Chartered Accountants.
Each organization started at a different point, with some diving straight into integrated reporting and others developing integrated reports after a longer journey of first developing separate corporate responsibility or sustainability reports. However, all use integrated reporting to improve their organizations, and to provide a fuller picture of how they create value for their members and other stakeholders.
Learning from their experiences provides a basis for other PAOs to consider how to approach integrated reporting in their own organizations.
Association of Chartered Certified Accountants
A key goal for the ACCA was developing greater insight into the quality of the strategic thinking of ACCA’s leadership, including:
After a number of years of integrated reporting experience, ACCA has further developed its current report to:
Chartered Institute of Management Accountants
For CIMA, integrated reporting provides the basis to better understand opportunities and challenges and resource requirements all in the context of its business model. Its journey helped the business by significantly improving management and external reporting by:
In terms of developing the business, integrated reporting led to better ways of working through:
CIMA’s was supported in its integrated reporting process by Black Sun, a stakeholder communications company that also works closely with the International Integrated Reporting Council.
Over the last 10 years, CPA Australia has moved from standalone reporting to combining their annual and sustainability reports, and now to integrated reporting. The shift toward integrated reporting is based on monthly integrated reporting within the organization. Their earlier sustainability reporting experience meant that they had relatively mature systems and processes. The addition of assurance also helps provide additional confidence in non-financial data.
Key features of their implementation approach include:
Institute of Chartered Accountants of Namibia
Integrated reporting is not just relevant to larger PAOs. The benefits of integrated reporting for ICAN are compelling despite its small size—560 members in a country of 2.3 million. Concerned its traditional annual report style was stale, ICAN uses its integrated report to boost its reputation in the marketplace, and to become a thought leader. In the words of ICAN CEO, Koos Du Toit, it is necessary to “walk the talk.”
A smaller organization has to be particularly pragmatic given resource constraints, and work with a wider group and peers where possible. ICAN started its process with understanding and applying the International <IR> Framework and spending time understanding the capitals in relation to their business model, and the outputs and outcomes they seek to deliver. It supplemented the Framework with guidance from accountancy firms and other sources, which took time. Importantly, ICAN worked with the South African Institute of Chartered Accountants to learn from its experience implementing integrated reporting.
South African Institute of Chartered Accountants
SAICA has issued an integrated report for the last six years, reflecting South Africa as the integrated reporting pioneers. Through its integrated reporting journey, SAICA endeavored to identify, and effectively utilize, the necessary ingredients that ensure an efficient integrated reporting process.
As with many organizations, the key ingredients are resources, e.g., time, budget, and staff. For SAICA, resource utilization has evolved as the organization became more comfortable telling its value creation story. For example, design and layout of the integrated report moved in-house. SAICA’s publishing unit’s development of a deeper level of understanding of an integrated report’s requirements has resulted in: conceptual designs that reflect the organization, lower costs, and reduced man-hours related to conceptualization and alterations.
However, SAICA also recognizes two key ingredients that continue to underpin the integrated reporting process: passion and commitment. The presence of these elements at every level of the organization and at every step of the integrated reporting process have demonstrable benefits to the integrated reporting process and the integrated report.
Critically, all these PAOs started their journeys with explicit support from their governing board, CEO, and executive team. This is a pre-requisite for integrated reporting success.
Their additional key tips for other PAOs include:
Learn from Leaders
Regardless of where your organization is on the integrated reporting journey, the annual reports of each of these organizations offer learnings, ideas, and examples. Contact me if you would like to connect with these PAOs more directly.