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Re-assessing the valueof corporate reporting
ACCOUNTANCY FUTURES
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Contents
2
Foewo 3
Summa 4
Itouctio 6
Fiigs 8
Coclusio 12
ABOUT ACCA
ACCA (the Associatio of Chatee Cetifie Accoutats) is the global bo fo
pofessioal accoutats. We aim to offe busiess-elevat, fist-choice qualificatios topeople of applicatio, abilit a ambitio aou the wol who seek a ewaig caee
i accoutac, fiace a maagemet.
Foue i 1904, ACCA has cosistetl hel uique coe values: oppotuit, ivesit,
iovatio, itegit a accoutabilit. We believe that accoutats big value to
ecoomies at all stages of thei evelopmet. We seek to evelop capacit i thepofessio a ecouage the aoptio of global staas. Ou values ae alige to
the ees of emploes i all sectos a we esue that, though ou qualificatios, we
pepae accoutats fo busiess. We seek to ope up the pofessio to people of all
backgous a emove atificial baies, iovatig ou qualificatios a thei elive
to meet the ivese ees of taiee pofessioals a thei emploes.
We suppot ou 147,000 membes a 424,000 stuets i 170 couties, helpig
them to evelop successful caees i accoutig a busiess, base o the skills
equie b emploes. We wok though a etwok of 83 offices a cetes a moe
tha 8,000 Appove Emploes wolwie, who povie high staas of emploee
leaig a evelopmet. Though ou public iteest emit, we pomote appopiate
egulatio of accoutig a couct elevat eseach to esue accoutac cotiuesto gow i eputatio a ifluece.
ABOUT ACCOUnTAnCy FUTUres
The ecoomic, political a eviometal climate has expose shotcomigs i the
wa public polic a egulatio have evelope i aeas such as fiacial egulatio,fiacial epotig, copoate t aspaec, climate chage a assuace povisio.
I espose to the challeges pesete to the accoutac pofessio b this ew
busiess eviomet, ACCAs Accoutac Futues pogamme has fou aeas of focus
access to fiace, auit a societ, eviometal accoutig, a copoate epotig.
Though eseach, commet a evets ACCA will cotibute to the fowa agea ofthe iteatioal pofessio, busiess a societ at lage.
www.accaoba.co/af
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re-Assessing The vAlUe OF COrpOrATe repOrTing 3
Foreword
T tat of cooat ot a bco a ouc of
ca cot a bat ct a. A aua
ot a ot o, a tak u ca ouc o
t at of a, o atfacto of t u of to
ot a . T at of t oba faca c
a o a ufo t o t uo a ffctof coa ot. i t t a ac fo t tatoa
aua ot?
To aess these questios a issues, we have caie out this suve of 500 epot
uses i the UK, US a Caaa to povie a base of ata o which to buil futhe
eseach. Thee wee thee categoies of paticipats capital povies (lage a small
ivestos); ceit povies (baks, ceit maagemet) a othe stakeholes (such assupplies, a compa emploees) to give a wie pespective, give that epots ae
itee to be geeal pupose statemets.
This epot is just the stat of what will be a ogoig a i-epth ebate o the futue
of copoate epotig facilitate b ACCA. Ou aim, though iscussio a eseach, isto ceate clea a pactical poposals that will ecofim copoate epotig as a vitalsouce of ifomatio to ivestos, a to pomote busiess cofiece. As pat of ou
Accoutac Futues pogamme, we will be caig out a seies of iitiatives with ou
pates a ke stakeholes aou the wol that will she light o this ke subject.
We woul like to thak eveoe who took pat. The fiigs will ifom ACCAs
iitiatives o copoate epotig a we hope the ae of iteest to polic-makes,egulatos, CFOs, ivestos a eveoe who has a iteest i whee the global ebate
o copoate epotig is heaig.
Jaua 2012
FOrEWOrd
If ou have a questios about this epot, please cotact Ia Welch, hea of polic
at ACCA:
T: +44 (0)20 7059 5729
F: +44 (0)20 7059 5771
M: +44 (0)7739 862928
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Summary
Cooat ot a ow o co. T a bco o, a c
cott. how, wt t to a aou taa, t ut ot a ot
awa aoou a oft fa to coucat ca. e fo tcca t t ca ba to u. A t a auc ca uca t ot a at to,
bot cut a otta, o o t to a a coac o? Ca t of bot
uato a to b atf b t a ocut?
These issues have esulte i gowig
pessue to ovehaul copoate epotig.
I ecet eas we have see the gowthof aative epotig, a iceasig
ema fo a boae set of o-fiacial
isclosues. Attempts have bee mae
to commuicate isk maagemet,
goveace, eviometal a social
issues, a busiesses loge-temstategic plas via the epot.
We ae ow witessig the emegece
of itegate epotig, which attempts
to big togethe these themes i a
coheet famewok. It seeks to cofimivestos as the pima auiece, a
to commuicate moe effectivel a wie
vaiet of fiacial a o-fiacial
isclosues. A i the backgou,
almost uemake upo, we ae seeig
ivestos seekig much moe ifomatio
i eal-time, via ewsfees, pesseleases, maket setimet a souces
such as bokes epots, quatel
epots, a via iect egagemet with
the compa.
prOjeCT Aims
To ietif what the eal ives fo
chage shoul be, ACCA set out to speak
iectl to ivestos, to get thei views
o whethe the still value the aual
epot, a whethe the got what theeee fom it. ACCA fiml believes
that ivestos ae the foemost auiece
of the epot, a we believe that thei
ees must be place at the heat of
futue evelopmets.
But give that aual epots ae
cuetl suppose to be all-pupose
ocumets, a will cotiue to povie
ifomatio to a age of stakeholes,
we also sought the views of othe
iteeste goups, such as capitalpovies, supplies, customes a staff.
We aske 500 espoets, base i the
US, UK a Caaa, whethe the still
value the ifomatio the epot gave
them, o whethe the pefee to el
o othe souces. A i the see the
situatio chagig i the futue?
Key Findings
Pehaps eassuigl, 50% of ouespoets cofime that the aual
epot is still thei pima o ol
souce of ifomatio. Howeve, moe
tha a quate of ou sample (26%)
felt that it is ifficult to assess a
compas pefomace fom the epot.A thee was a wie age of citicisms
of the epot.
47% tout tat ot a too o.
35% ft ot a too backwa-
fac.
40% a tat ot a too a
uo to t t .
35% o tat t a too
co t cut fo. Of t: 68% b tat t ot
taa tat coa
a qu to foow w to
ba, w
61% ut t ow to a
qut.
Thee wee also mixe opiios as to
whethe compaies wee epotig
balace a ubiase views of thei
positio a pefomace. As ma
espoets isagee as agee thatstaas ecouage compaies to
povie a coectl balace view of thei
pefomace, ie to iclue ba as well
as goo ews. A almost half believe
that too much pomotioal mateial ha
cept ito the epot. These ae woigfiigs, uig agaist the cocept
of eutalit that must uepi a
meaigful epot.
The suve also maage to ucove the
ifomatio that is wate b ivestosbut as et uelivee, a that, if
meaigfull aesse b copoate
epots, coul a value to ivestos
a othe stakeholes. This ifomatio
povies a useful cotext fo futueevelopmets, fo egulatos, fiace
leaes who wish to egage ivestos,
a fo the pepaes of epots.
71% of espoets thik compaies
shoul be epotig moe o
potetial isks that coul affect theipefomace. This is usupisig,give the spotlight that has bee
focuse o the teatmet a
maagemet of isk b compaies,
a paticulal elevat i the
post-cisis wol. But such a stog
esult caot be igoe, a theeis cleal a oppotuit fo bette
commuicatio of isk.
70% sai that a compas ke isks
a how the itee to maage o
mitigate them was the most pessig
issue fo them followig the ecoomic
cisis. The othe aeas that ivestosae sigificatl moe iteeste i
post-cisis iclue:
63% wee moe focuse o futue
plas a pospects (63%)
59% o ke pefomace
iicatos, a 58% o the fiacial statemets
themselves (58%).
The emegece of itegate
epotig was also welcome. 59%
sai that the iclusio of social
a eviometal ata though a
itegate epot woul a value.
respoets expesse a clea iteest
i moves to eal-time epotig. This
is cosistet with a ecet epot b
the Washigto-base Cete fo Auit
Qualit, base o iscussios of aualepot uses, which coclue that b
the time the aual epot is issue,
the ifomatio cotaie is too ate
to ive ivestmet ecisios; it is moe
ofte use a baselie, supplemetewith aitioal aalsis base o moe
cuet ifomatio such as quatel
epots a pess eleases.
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re-Assessing The vAlUe OF COrpOrATe repOrTing 5
ACCAs espoets believe it woul
a value if such ifomatio coul beexteall assue, a this poses a
umbe of questios that ee to befuthe exploe. It is uclea if exteal
assuace coul be feasibl applie
to the full age of ifomatio that
maagemet cotiuousl poviesivestos thoughout the ea, such as
pess eleases, quatel epots o othe
aoucemets to shaeholes. It woul
cetail povie a challege to the
accoutig pofessio a the cuet
auit moel. Is thee eve the capacita the techical meas to meaigfull
appl such a appoach?
nexT sTeps
The ifomatio gleae b the suve
will povie ACCA with a stog platfomi its ogoig covesatios with
staa settes, egulatos a the
busiesses a fiace pofessioals
who shape a ceate copoate
epots. We ae also evelopig a stog
pogamme of egagemet with ivestosaou the wol, icluig epots,
o the age of views that ivestos
have i egas to the whole sstem of
iteatioal staas, of copoate
goveace, a the futue of epotig.
Those ivolve i shapig the futue ofcopoate epotig ee to take otice
of these fiigs a othe ata thatsuppot these fuametal isights:
ito ou b oto a
t ot otat auc fo
t ot, a to b btt
a t futu outo.
T au of ot to to
ca a ou b tt.
T ca b ac b o
a at focu o fowa-fac
a, k aat, a o
tat t a ot u
a o cot wa. itat
ot ow a otta to
o t aa fowa.
T t a to f t
ot t ou b u
w ob, a t
a aua ac, a w
a b boa to tat t
cou tat to qu.
If this ca be achieve, the epot will
become a moe vital tool fo ivestos,
a able to moe compehesivel
commuicate the uelig factoselatig to the positio a futue
pospects of a compa.
Fiall, the issue of eal-time
epotig ees to be examie moe
compehesivel. developmets
i techolog, the fagmetatio
of taitioal meia chaels, the
emegece of social a mobile meiaplatfoms a avaces i aalsis
techiques have combie to ceate a
ich pool of eail available but lagel
u-assue souces of b-the-miute ata
fo ivestos. How ca we a geate
assuace to such chaels? A wheeoes this leave epotig as a whole a
futue ole of accoutats?
ACCA, though its Copoate repotig
reseach a Isights pogamme a
ogoig egagemet with busiesses,
staa settes a ivestos, will exploe
these a othe issues. A b oigso begi to esolve whee these excitig
evelopmets will take us i futue eas,
a pipoit both the challeges a
oppotuities that lie ahea.
Fuametall, the aual epot is stillsee as a ocumet which as value to
stakeholes. Howeve, epotig must
evolve i oe to maitai a ehace
its value.
TTTSummary
SUMMAry
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Introduction
Compaies evote extesive esouces i
pepaig thei aual epots. A ecet
stu b the Black Su cosultac i
the UK eveale that the 2010 epots
fom FTSE100 compaies ha tpicall
expae b 11 pages o 2009, a ow
aveage 175 pages, with six compaiestotallig moe tha 300 pages. yet thee
is gowig scepticism that the epots
elive what auieces equie.
The UK Fiacial repotig Coucili 2011 lauche a cuttig clutte
iitiative, aguig that the value of
epots was beig euce i the ees of
ivestos b the iclusio of uecessa
mateial. Clutte i aual epots is a
poblem, obscuig elevat ifomatioa makig it hae fo uses to fi the
saliet poits about the pefomace of
the busiess a its pospects fo log-tem success it sai.
This was echoe i the US, whee,followig a seies of high-level outable
evets i the summe of 2011, the
Cete fo Auit Qualit summaise the
views of paticipats (which iclue
ivestos, aalsts, pepaes, auitos,
lawes a othes):
Aual epots ae i a state of
isclosue oveloa esultig fom the
expaig complexit of GAAP, as well as
compliace a liabilit coces o
the pat of pepaes a cousel. Theewas a clea call fom ivestos a
pepaes fo elimiatio of euat
mateial i aual epots though bette
cooiatio of isclosues elate to
legal ifomatio, maagemet aalses,auite ifomatio, a impotatl, a
pioitisatio of isk factos.
Too ofte, sai the CAQ epot, isk
factos iscussios cotaie athig
a evethig. This fiig mios
the UK FrCs view that compaies
fequetl isclose too geeal isks suchas a owtu i the ecoom, athe
tha specific isks a how the ae
aessig them withi the busiess.
We believe it is paticulal impotat
that iectos explai cleal how the
ietif a maage isk a what keepsthem awake at ight sai FrC CEO
Stephe Haill i 2011.
The fist step i ietifig what exactl
ivestos get out of aual epots is
to ecogise that the o ot fom oehomogeeous goup. Iee, it is ofte
assete that lage istitutioal ivestos,
alog with othe ke figues such as fu
maages, egulatos, fiace povies,
aalsts a bokes, have little ee
fo the copoate epot at all cetalplaes like these woul expect to have
iect access to the boa i oe to get
the ifomatio the equie.
I its 2011 cosultatio with UK
maket paticipats o the issues ofcopoate epotig a auitig, the
FrC cofime this, epotig that:
some istitutioal ivestos sai that
the place moe impotace o the
assuace the eceive fom iscussios
with boas a maagemet tha othe wos i the aual epot. This was
paticulal the case whe it came to
assessig the qualit of isk maagemeta iteal cotol, fo which thei mai
souce of assuace was the qualit of
the boa2.
I its espose to that cosultatio
execise, ACCA accepte that the
aual epot3was oe meas bwhich effective commuicatio with
shaeholes a othe stakeholes
ca be achieve, although it is ot the
ol oe ... the aual epot shoul ot
theefoe be see as the ke to achievighigh levels of shaehole egagemet.
Ultimatel, we ee to assess what
ole the copoate epot shoul pla,
a who it shoul be aime at. If it
is wiel felt that aual epots ak
elativel low amog uses souces,the shoul seious effots be mae to
ovehaul them? O, give that pelimia
a iteim esults (without the
accompaig full epot) ca move the
makets a lea to a compas shaes
beig a bu o sell ecommeatio,oes this show that the aual epot
ow as little value?
ACCA wate to establish the facts
behi the assumptios a questios.
We also wate to iscove whetheuses of aual epots ea them
moe caefull ow tha befoe the
fiacial cisis.
THE CENTER FOR AUDIT QUALITYS ROUNDTABLES SUMMARY REPORTED THAT
PARTICIPANTS RECOMMENDED THAT THE FULL RANGE OF STAKEHOLDERS
DEVELOP A SHARED VISION ON THE APPROPRIATE CONTENT OF ANNUAL
REPORTS FOR TODAYS INVESTOR NEEDS WITHOUT BEING HINDERED BY
CURRENT REPORTING REQUIREMENTS AND THE LEGAL ENVIRONMENT.
1 Effective Company Stewardship: enhancing corporate reporting and auditing(Jaua 2011) FrC
2 Fiacial repotig Coucil, Boards and Risk: a summary of discussions with companies, investors and advisors Septembe 2011
3 Effective Company Stewardship, commets fom ACCA o the iscussio pape fom the FrC, Mach 2011
www.accaglobal.com/geeal/activities/techical/achive_v2/subject/busiess/c1013
IT WILL BE OF LITTLE AVAIL TO THE PEOPLE THAT THE LAWS ARE MADE BY MEN
OF THEIR OWN CHOICE IF THE LAWS BE SO VOLUMINOUS THAT THEY CANNOT BEREAD, OR SO INCOHERENT THAT THEY CANNOT BE UNDERSTOOD.
jAmes mAdisOn, presidenT And primAry AUThOr OF The Us COnsTiTUTiOn
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re-Assessing The vAlUe OF COrpOrATe repOrTing 7InTrOdUCTIOn
TIntroduction
I a stu of aalsts ACCA uetook
fom 20046 thee was geealscepticism ove the value of the full
epots as most of what the value/eee was covee b the pelimia
aoucemets two moths ealie but
we wate to iscove if the cisis ha put
geate value o the full auite accouts(a explaato otes to the accouts
which ot appea i the pelims).
A elate issue was whethe it woul a
value if the full epot was auite, athe
tha just the fiacials woul this givea boost to the value of the fot e of
the epot? A woul such o-fiacial
ifomatio be booste i impotace
b beig itegate with the fiacial
statemets o woul this t to cate fo
too ma ispaate auieces a eup pleasig o oe?
Aothe ke aea we wate to examie
was whethe a moe flexible epotig
sstem, i which ma vesios of the
epot (eable b platfoms such asXBrL) coul be pouce to suit iffeet
stakeholes ees, woul aswe some
of the citicisms of copoate epotig.
Such coces have bee gowig i
ecet eas a i 2006 the CEOs of
the top six accoutig fims eclae thecopoate epotig sstem to be boke.
The calle fo quatel static fiacial
epots to be eplace b eal-time
epotig bigig i a much wie age
of pefomace measues. The fimssai that moe o-fiacial ifomatio,
customise to the use, a moe easil
accessible, woul have to be issue b
compaies as pat of a pocess of bigig
copoate epotig ito the igital ea.
Woul this be the ight wa to go? How
close to geuie eal-time epotig
woul be feasible o esiable, a
woul exteal assuace be ecessa
to give such commuicatio the same
ceibilit of cuet aual epots?
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T w fw otab ffc btw t UK, Us a Caaa ot a o
o tattca c btw t t cato of atcat.
Findings
The vAlUe OF The repOrT
1 Half of espoets sai the aual
epot (Ar) was the mai souce of
ifomatio the use to assess a
compas pefomace (41% sai it
was thei mai souce a 9% sai itwas the ol souce the use.) Give
iceasig oubts about the value of the
Ar to lage shaeholes i paticula,
compaies ca at least take comfot
fom this fiig whe the ae puttig
time a effot ito poucig thei
epots. Meia epots, ivesto biefigsa compa pospectuses ae also
impotat souces of ifomatio.
Pehaps supisigl, ol 20% of
istitutioal ivestos sai that the maeuse of pelims i assessig compaies
pefomaces, which was less tha
pevious ACCA eseach ha suggeste.
But thee ma be a elemet of cofusio
aou this issue a PwC epot issue i
Jul 2011 iicate that pelims wee amajo souce of iteest fo ivestos, but
that ma of them wogl assume that
these ha bee auite. The epot ightl
coclues that this issue poses questios
fo the auit pofessio o the timeliess
of auit opiio as assuace at that stagewoul seem to be of beefit to ivestos.
50% Aual epot
4% Liaisig with boa membes iectl3% Liaisig with ivesto elatios team iectl
1% Pelimia aoucemet
5% Iteim epot
17% Meia / pess epots / Google seaches
8% Ivesto biefigs / compa pospectus
9% recommeatios fom pesoal cotacts
3% Othe
WHAT IS THE MAIN SOURCE OF INFORMATION YOU USE TO ASSESS COMPANY PERFORMANCE?
2 The less ecouagig ews fo the
cuet epotig set-up is that views
ae mixe o the ease o ifficult of
assessig a compas pefomace
usig the Ar. The biggest popotio of
espoets sa that it is eas (41%),but thee is still a sizeable mioit who
sa it is ifficult (26%). A thee ae
a seies of specific citicisms of the Ar.
respoets ae moe likel to agee that
the Ar is:
too log (47%)
too backwa lookig (35%) too complex (35%) the ke
peceive ive of this complexit is
the epotig staas compaies ae
equie to follow (68%) a the legal
equiemets (61%) too geeal pupose (40%).
discouagigl, moe espoets
isagee tha agee that ifomatio
povie i the cuet Ar fomat is clea
a cocise. This is woig give thatthe issue of clait was ate highl i
tems of impotace factos i the suve.
Is this just the poo state of epotig as
pactise b compaies o is the fomat
of the Ar itself causig the poblems?
Eithe wa it is a sigificat iictmetof the state of cuet epotig. Give
the ogoig impotace of the Ar as
ietifie i poit 1 above, this is a
fiig of some coce.
Iteestigl, the suve also fou that
sice the global fiacial cisis, 56% of
espoets aalse Ars moe caefull
tha the i peviousl.
The fiig that ma believe Ars to be
too geeal pupose eflects a cetal
questio who ae epots aime at a
ca oe epotig moel seve the eesof ispaate auieces?
ACCA has ague that accouts must
give ubiase ifomatio eflectig the
ecoomic pefomace a positio of
a busiess a i geeal, the ees
of both ivestos a egulatos ae best
seve b such a appoach. IFrS itselfhas the cocept of eutalit at its heat,
which we believe is the ight appoach to
esuig ubiase epotig.
But it must be accepte that accoutig
staas ae oetheless a cause ofsome coce. Moe tha two-this of
those espoets who believe Ars to
be ove-complex blame the epotig
staas fo this. A oughl the
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re-Assessing The vAlUe OF COrpOrATe repOrTing 9FIndInGS
dot kow
Stogl agee 5
4
3
2
Stogl isagee 1
0% 10% 20% 30% 40% 50%
Too geeal pupose
Too complex
Too backwa lookig
Too log
WHAT DO YOU THINK ABOUT CERTAIN FEATURES OF CURRENT ANNUAL REPORTS?
same umbe of espoets isagee
as agee that staas ecouagecompaies to povie a coectl
balace view of thei pefomace ie
iclue ba as well as goo ews.
These fiigs ae pehaps ot a
supise give the fequet citicismsof staas. ACCAs Complexity in
Financial Reporting survey4povie a
clea iicatio fom espoets that
usig IFrS is ovel a uecessail
complex. So the IASB still has wok to
o i esuig its staas meet uses
ees fo clait, especiall give theogoig covegece pogamme with
the ules-base US GAAP egime.
3 The fact that almost half (48%)
thik Ars ae mae b too much
pomotioal mateial is aothe coce.Give that such mateial woul ievitabl
be fou i the fot e of the epot,
this tallies with pevious ACCA eseachwhich has fou a lack of pope
uestaig of, aative epotig a
what it was tig to achieve.
Oe 2008 stu5eveale a lack of
iteest fom aalsts i athig othe
tha ha umbes, while a 2010 epotcommissioe b ACCA a deloitte6coveig ie makets suggeste that
while compaies wee tig thei best
to egage i aative epotig, thee
was cofusio ove its objectives a
auieces, a suggestios that epots
suffee fom ifomatio oveloa.
The latest ACCA suve fou that a
ke ifluece i tems of whethe uses
fou a aual epot eas to use was
whethe it povie the ight balace of
fiacial a o-fiacial ifomatio,to allow them to make ifome
ecisios. All this gives justificatio
to attempts b egulatos to aesswhethe at least the legth of epots
(if ot thei complexit) ca be euce
b miimisig o-essetial clutte i
aual epots7.
imprOving The repOrT
4 I tems of what ca be oe toimpove thigs, a sigificat popotio
of espoets thik compaies shoul
be epotig moe o potetial isks
that coul affect thei pefomace
(71%). Ma egulatos will pobabl be
saguie about this fiig, give thei
ow citicisms of isk epotig a theee to impove.
This is a substatial majoit of
espoets a this issue cleal ees
to be aesse b compaies.
risk also toppe the list of subjects i
which espoets wee moe iteeste
4 Complexity in Financial Reporting, ACCA, 2009. www.accaglobal.com/pubs/geeal/activities/liba/fiacial_epotig/othe/tech-ms-com.pf
5 davi Campbell a richa Slack, Narrative Reporting: Analysts Perceptions of its Value and Relevance , ACCA, 2008
www.accaglobal.com/pubs/geeal/activities/eseach/eseach_achive/-104-001.pf
6 ACCA a deloitte, Hitting the notes but whats the tune?ACCA, 2010. www.accaglobal.com/pubs/af/epotig/ew/hittig_the_otes.pf
7 www.fc.og.uk/about/cuttigclutte.cfm
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sice the cisis o less tha 70% sai
that ke isks a how compaies weeiteig to maage o mitigate them
was ow was the ke issue fo them.
5 The othe ke issues that ha chage
i thei peceive impotace pe- a
post-fiacial cisis wee futue plasa pospects (63% of espoets)
ke pefomace iicatos (59%) a
the fiacial statemets themselves
(58%). It was otewoth that a aea
which ha actuall falle i iteest was
social a eviometal ifomatio,which tallies with the view that fo ma
compaies a thei stakeholes, this
was alwas a ice to have i the goo
times, but ot of fist ak impotace
uig a owtu.
But it is otewoth that itegate
epotig, eve i its ifac, ma
pove to be istumetal i evesig
the eclie i iteest i social a
eviometal ata.
Whe aske if icluig such ifomatio
i a itegate epot woul be useful
to them, 59% sai es. While thee
was o clea aswe i tems of what
evelopmets woul most impove the
state of copoate epotig, it oes seemthat itegate epotig is a iteestig
aea to ma paticipats, which
cofims aecotal eviece acquie b
ACCA i ecet moths. Cetail ACCA
believes that sustaiabilit ees to be at
the heat of epotig.
1 3% stogl isagee
2 24%
3 23%
4 40%
5 9% stogl agee
1% ot kow
ARE ANNUAL REPORTS MARREDBY TOO MUCH PROMOTIONAL MATERIAL?
HOW HAVE THINGS CHANGEDSINCE THE GLOBAL FINANCIAL CRISIS?
4% yes, I ow ea the
aual epot, whee I i
ot peviousl o so
18% no, I still use othe
souces
21% no, the pelimia
esults still effectivel guie
m assessmet
57% yes, I ow eview the
aual epot moe caefull
tha I i peviousl
Social a eviometal policies
CEOs/Chaimas statemets
Stakehole elatioship maagemet
Auit epot
diectos emueatio epot
Full otes of accouts
Copoate goveace policies a poceues
A esciptio of the busiess moel
Fiacial statemets
Ke pefomace iicatos
Futue plas a pospects
Ke isks a thei maagemet/mitigatio
0% 10% 20% 30% 40% 50% 60% 70% 80%
WHAT IS OF THE MOST INTEREST IN REPORTING POST FINANCIAL CRISIS?
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re-Assessing The vAlUe OF COrpOrATe repOrTing 11FIndInGS
WHAT IS OF THE MOST INTEREST IN REPORTING POST FINANCIAL CRISIS?
A itegate epotig famewok, which woul give a oveview of the
busiess moel icluig ESG (eviometal, social a goveace) issues
A epotig moel that suppots the ifomatio ees
of log-tem ivestos, such as pesios fus
Less focus o shot-tem emas, eg quatel epotig,
which helpe to ive shot-tem behaviou
A iteatioal copoate epotig famewok,
to esue compaabilit/cosistec acoss juisictios
Impovemets i fiacial epotig staas
0% 10% 20% 30% 40% 50%
1 5% not at all useful
2 14%
3 21%
4 41%
5 19% Ve useful
IF NON-FINANCIAL DATA, INCLUDING SOCIAL AND ENVIRONMENTAL DATA,WAS INTEGRATED WITH COMPANY FINANCIAL RESULTS, HOW USEFUL WOULD IT BE?
emerging issUes
6 respoets expesse iteesti moves to eal-time epotig,
although a caveat to this was thatsuch ifomatio shoul be exteall
assue. This suppots iitial fiigs
fom ACCAs global seies of auit
outables i 2010, which fou thatauitos woul have a cucial ole to
pla i veifig a moe egula flow of
ifomatio fom compaies.
The ema fo iepeet assuace
of maagemet epots was cofimeb othe ecet stuies fistl, the
ACCA a deloitte epot (see page 9
above), which fou that the usefuless
of such epots woul beefit fom theiclusio of a exteal auit opiio.
The CAQ outable seies i 2011
also fou suppot fo the iea thatexteal assuace woul be useful
fo the ifomatio that maagemet
cotiuousl povies ivestosthoughout the ea such as pess
eleases, quatel epots o othe
aoucemets to shaeholes.
The avet of XBrL has le to a
icease iteest i the issue of whetheepots ca o shoul be customise to
iffeet auieces, but the fiigs o
this wee mixe. Some espoets felt
it woul be useful to be able to o this,
but othes felt that eveoe shoul get
the same ifomatio albeit pehaps
with two vesios (oe simple vesio
available to uses geeall, a a moeetaile vesio fo aalsts).
Copoate goveace issues ha ise i
impotace sice the cisis accoig to
the espoets, but it was otewoth
that thee was ol a elativel small ise
i iteest i iectos pa. Give thefuoe i the wie political a public
aeas about executive emueatio
sice the oset of the cisis, this seems
to suggest that shaeholes a fiace
povies ae keepig focuse o the eal
issues as the see them.
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12
Conclusion
Fo a t coc b a tako o cooat ot, ou u
to ut tat t aua ot a ot fcac fo to a
ot tako. i, t otac to a ca c t ot of t obafaca c a ot a w ot o cafu. T at at o a
coua backo aat wc uato, taa-tt a coa t ca
o about t tak of f, caf a a o au to cooat cou.
8 Effective Compa Stewaship: ext steps. Septembe 2011. Fiacial epotig Coucil
Howeve it is clea that cetai issues
ee to be aesse i oe to a
value to ivestos. This will cemetthe epots positio as a ke souce
of assue ifomatio to this most
impotat auiece.
This stu a othe ecet eseach leasto a umbe of fuametal isights:
Ivestos shoul be positioe as
the most impotat auiece fo theepot, a ee to be bette egage
i its futue evolutio.
The value of epotig to ivestos ca
a shoul be stegthee. This ca
be achieve b poviig a geate
focus o fowa-facig plas, isk
maagemet, a popel itegatigthese a othe issues i a moe
coheet wa. Itegate epotig
shows eal potetial to move this
agea fowas.
Thee is still a ee to simplif the
epot the shoul be pue whee
possible, a pesete i plaielaguage i places, as well as beig
boaee to itegate the isclosues
that ivestos equie.
As a post-scipt to ACCAs suve, oe
of the most ee-catchig fiigs i the
UK FrC cosultatio was that thee waswiespea oppositio to the poposal
that compaies shoul post thei aual
epot a accouts o thei websites,
athe tha pouce them i pit ...ma small shaeholes poite out
that the fi it easie to ea aaotate a ha cop epot a to
compae it agaist othes. Oppositio
to this poposal was ot cofie to
pivate ivestos. Stakeholes fom
othe goups expesse coce that
olie-ol ifomatio coul be alteeafte publicatio a cosiee that
ha cop epots povie a impotat
safegua agaist such behaviou8.
This stegth of opiio has le to thepoposal to scap ha copies of the aual
epot i the UK beig oppe, although
this has bee cosiee moe favouabl
i a umbe of atioal makets.
ACCA agees with the FrC that compaiesshoul give caeful cosieatio to the
was i which techolog ca impove
accessibilit to aual epots.
Fo it is evelopmets i techolog
that have acceleate the ebate othe futue of copoate epotig. The
olie evolutio has bought about moe
geeall what has bee efee to as
the emocatisatio of kowlege. A
it will be iteestig to see how moves
to itegate ata i a sigle epot willevelop give that it appeas cota to
a te of customisatio of ifomatio.
The ebate ove moe egula
commuicatio will cotiue. The
accoutac pofessio shoul aess
the fiigs of the CAQ iscussios, which
coclue that the aual epot came
out too late to ive ivestmet ecisiosa that it eee to be supplemete
b moe cuet ifomatio such as
quatel epots a pess eleases.
The pofessio ees to examie how
such ifomatio coul be exteallassue. Wokig i taem, staa
settes, the accoutac pofessio a
busiess ee to esue that aual
epotig is as use-cetic as possible.
As ou suve shows, the aual epot
is still see as a ocumet which asvalue to stakeholes. Howeve, epotig
must evolve i oe to maitai a
ehace its value.
ARE ANNUAL REPORTS MARRED BY TOO MUCHPROMOTIONAL MATERIAL?
20% Lage istitutioal shaehole
6% Vetue capitalist/busiess agel
42% Pivate ivesto with a sizeable
potfolio of ivestmets
32% Small shaehole (1,000
o less) i oe compa o a small
umbe of compaies
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