reassessing value

8/13/2019 Reassessing Value

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Re-assessing the valueof corporate reporting

ACCOUNTANCY FUTURES


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2

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

[email protected]


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4

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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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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6

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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8

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

TFindings


10/16

10

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?

FindingsT


11/16

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.

TFindings


12/16

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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14


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16

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formatiocotaieithispublicatioisproviefor

geeralpurposesoly.Whileeveryefforthasbeema

etoesurethattheiformatioisaccurateaupto

atea

tthetimeofgoigtopress,ACCAacceptsorespos

ibilityforaylosswhichmayarisefromiformatiocotaieithispublicatio.nopartofthispublicatio

may

bereprouce,iayformat,withoutpriorwrittepermissioofACCA.ACCAdecember2011.

ACCA

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Loo WC2A 3EEUite Kigom

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