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IMA Outlines Actions to Transform Corporate Reporting
December 10, 2013
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Professional Association Reacts to IIRC’s New Framework
Montvale, N.J., December 10, 2013 – In response to the International Integrated Reporting Council’s (IIRC) International Integrated Reporting (IR) Framework released yesterday, professional management accounting association IMA® (Institute of Management Accountants) has outlined several actions to transform corporate reporting to better serve the public interest. Follow this link for IMA’s official comment letter: http://bit.ly/1kvT70L.
“IMA and the IIRC are in complete agreement that disclosures must be improved in order to better inform investors and other key stakeholders about the sustainable value creation capacity and capability of enterprises,” said Jeff Thomson, CMA, CAE, president and CEO of IMA. “To realize the benefits of IR, we must define our goals, adopt better technological standards, embrace a learning and growth approach, market-by-market, and shift our short-term financial focus. IMA also applauds the IIRC’s due process in reacting to issues from the April 2013 Consultation Draft exposure process.”
As IMA outlined in its original June 17, 2013 comment letter on the IIRC Framework Consultation Draft, the following four issues must be addressed to reap the benefits of IR:
- The end goal should not necessarily be to produce a single, integrated report. It should be to motivate disclosures that better inform investors and other stakeholders as to the sustainable value creation capability and capacity of the organization. A good first step would be to clarify and simplify existing disclosures. It may turn out that interlinked or interconnected reports will produce a higher ROI for investors.
- The ROI and “proof of concept” assessment of IR should shift more to actual value delivery participants (e.g., business owners, business managers, CFOs, preparers, investors, analysts) relative to value chain observers and monitors (e.g., academics, consultants and regulators). This will help develop the required market evidence.
- A “learning and growth” approach should be taken to IR with tangible step changes such as improving MD&A disclosures, motivating more concise and informative financial reports including reporting on intangibles, creating better connections to the overarching “strategy story” and supporting new sustainability/ESG frameworks such as GRI (GRI issued the next generation, “G4,” of its guidelines on May 22, 2013 in Amsterdam). Mandatory reporting is not recommended and history has often shown it results in a social tax.
- Technology enablement including XBRL/structured data standards could play a role to potentially improve the cost/benefit of IR. In IMA's May 2, 2013 webinar with nearly 1,000 global participants, the responses to the question "which is the most significant barrier to IR in your organization" were: 13 percent weak external drivers; 21 percent lack of appetite from the top; 20 percent strong organizational silos; 32 percent patchwork of IT programs/legacy systems; and 14 percent other.
Additionally, IMA believes that to create a sense of urgency in corporate reporting, and to embrace a learning and growth perspective market-by market, jurisdiction-specific working groups, including one in the U.S., should be mobilized.
To access IMA’s comment letters on other key legislative and regulatory issues in Washington and globally, follow this link: http://www.imanet.org/about_ima/advocacy_activity.aspx
. About IMA® (Institute of Management Accountants) IMA®
, the association of accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA®
(Certified Management Accountant) program, continuing education, networking and advocacy of the highest ethical business practices. IMA has a global network of more 20,000 CMA members in more than 100 countries and 300 local professional and student chapters. IMA provides localized services through its offices in Montvale, N.J., USA; Zurich, Switzerland; Dubai, UAE; and Beijing, China. For more information about IMA, please visit www.imanet.org