According to KPMG, Integrated Reporting provides an opportunity for companies to make their case for capital more effectively by focusing their reporting on their business story and value creation.
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Alan Buckle, Deputy Chairman of KPMG International, said: "We applaud the work of the IIRC and urge regulators, investors and governments to actively drive for change for better business reporting which can help ensure future financial stability."
Whilst welcoming the Draft Framework as an important step in the evolution of corporate reporting, KPMG also called on the IIRC to address the many different interpretations of Integrated Reporting in the marketplace. KPMG said that it hoped the final version of the Framework would address any risk of misinterpretation to ensure reports stay focused on helping readers understand how the earnings potential of the business has been developed and protected. It said the test of success would be whether Integrated Reporting was able to provide investors with the information needed to make better judgements on businesses’ ability to generate returns over the long term.
Commenting on the immediate relevance of the Draft Framework, KPMG said that whilst the IIRC had focused on the production of an ‘Integrated Report’, it believed that companies would be most interested in Integrated Reporting as a means to improve their existing narrative reporting. KPMG said it believed the concept of building narrative reporting around an organisation’s business model, and the resulting focus on how the business had been developed, would be particularly attractive to management teams looking to move their investor dialogue beyond short-term earnings.
David Matthews, leader of KPMG’s Integrated Reporting team and partner in the UK firm, said: "Integrated Reporting provides an opportunity to re-align corporate reporting with investor decision-making. It is an opportunity to shift the reporting focus from short term financial performance to long term value creation."
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