IFAC - Business Reporting

WHAT DO WE MEAN BY BUSINESS REPORTING? Organizations conduct a wide range of reporting, including financial and regulatory reporting; environmental, social, and governance (ESG) reporting (or sustainability reporting); and, increasingly, integrated reporting. Organizations communicate with their stakeholders about: mission, vision, objectives, and strategy; governance arrangements and risk management; trade-offs between the shorter- and longer-term strategies; and financial, social, and environmental performance (how they have fared against their objectives in practice). (Specific internal reporting issues are addressed in the   [http://www.ifac.org/global-knowledge-gateway/performance-financial-manag...%20and%20financial%20management%20section%3C/a%3E%3C/em%3E%3Cem%20style=]of the Gateway.) Implementation of effective reporting processes is essential for organizations to be able to provide this information. All sections in the business reporting process—the people and processes involved in the preparation, review, approval, audit (when relevant), analysis, and distribution of reports—need to be robust and closely connected to yield high-quality business reports in an efficient and timely manner. Since the 1970s, there has been significant progress toward the international convergence of financial reporting practices. Today, more than 120 countries use International Financial Reporting Standards (IFRS), including Enhancing Organizational Reporting [http:>InternationalIntegratedReportingFramework.IFACstronglysupportstheIIRCandhasparticipatedinvariouscapacitiesinthedevelopmenttheFramework. WHYISBUSINESSREPORTINGIMPORTANT? Effectiveandtransparentbusinessreportingallowsorganizationstopresentacohesiveexplanationoftheirbusinessandhelpsthemengagewithinternalandexternalstakeholders,includingcustomers,employees,shareholders,creditors,andregulators. High-qualitybusinessreportingisattheheartofstrongandsustainableorganizations,financialmarkets,andeconomies,asthisinformationiscrucialforstakeholderstoassessorganizationalperformanceandmakeinformeddecisionswithrespecttoanorganization’scapacitytocreateandpreservevalue.(Valueinthiscontextisnotnecessarilylimitedtomonetaryvalue,butcanalsocomprise,forexample,social,environmental,orwidereconomicvalue.)Asorganizationsfullydependontheirstakeholdersforsustainablesuccess,itisintheirinteresttoprovidethemwithhigh-qualityreports.Forexample,effectivehigh-qualityreportingreducestheriskforlendersandmaylowerthecostofcapital. Manyorganizationsareincreasinglycomplex,andhavelargereconomic,environmental,andsocialfootprints.Asaresult,variousstakeholdergroupsaredemandingincreasedESGinformation,aswellasgreaterinsightintohowthesefactorsaffectfinancialperformanceandvaluations. High-qualityreportsalsopromotebetterinternaldecision-making.High-qualityinformationisintegraltothesuccessfulmanagementofthebusiness,andisoneofthemajordriversofsustainableorganizationalsuccess. GLOBALPERSPECTIVESONBUSINESSREPORTING AccordingtoIFAC’srecentPolicyPositionPaper,