“There was a report out by Ernst and Young, into the reporting of the Top 100 companies here. That report indicated some really good progress – there was one area which they were particularly concerned about, which was a lack of board commitment to the actual reports themselves,” the Chartered Institute of Management Accountants’ chief executive Charles Tilley told CNBC Africa on Wednesday.
“It’s very important that the board is absolutely involved in the producing of those integrated reports and signing off on those reports.”
Integrated reporting could be the way forward to simplify technical company financial reports and statements. It is said to streamline a business’s performance results under one banner.
The Integrated Reporting Committee of South Africa believes that an integrated report tells the overall story of an organisation.
“Integrated reporting is really two things: it’s firstly about better reporting, I think financial reporting is not enough, and secondly it’s about better business. Business needs to think about what it takes, what it gives and the value that it ultimately provides to its investors and other stakeholders,” Tilley explained.
He added that it improves management and is not about sticking to just the financials, but rather about how the organisation is going to progress in the long term.
“Around 80 per cent of the value of a company was represented by the value on its balance sheet. Today that figure is under 20 per cent and going down, so there is a huge amount of value which is represented by its people, its brands, technology, which is not recorded on the balance sheet,” Tilly stated.
“The importance of reporting the whole business – how the business is today, how its making money, how its creating value, what are the opportunities and risks and therefore what the opportunities for value creation are into the future – is absolutely crucial to the investor and how they actually allocate their resources to business.”