ACCA research shows that investors are concerned about corporate reporting but also think integrated reporting might help

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08 Jun, 2013

The Association of Chartered Certified Accountants (ACCA) has issued two reports, ‘Understanding investors: directions for corporate reporting’ and ‘Understanding investors: the changing landscape’, which are part of a research series examining what investors want from corporate reporting. The reports reveal that investors have a lower level of confidence when it comes to corporate reports since the global financial crisis. However, they also show that integrated reporting might provide investors with information they are currently looking for elsewhere.

The reports, which surveyed 300 investors, shows that many investors feel too much discretion is given to managers over the financial numbers reported and would rather collect information elsewhere than from a traditional corporate report. Some investors even believe that annual reports do not provide much value. This is reflected in the following results of the report:

  • 69% respondents are more skeptical about company-provided information since the global financial crisis
  • 63% place greater value on information generated outside the company
  • 63% believe management has too much discretion in the numbers it reports

This led Ewan Willars, ACCA director of policy, to note that “[a]ccounting standard setters and regulators should be worried about the high percentage of investors who see no use to annual reports and the distrust of management discretion over company figures.” He also suggested that there might be a need to place more emphasis on external audits.

However, the findings of the reports also show that investors see a responsibility for selective reporting with the companies themselves: 93% of the respondents expressed support for the concept of integrated reporting and believed this could contribute to the usefulness of the information put out by the company. They would, among others, expect the following benefits from integrated reporting:

  • Better ability to understand the long-term outlook of a company
  • Greater information on how long-term risks, such as climate change, will affect the business model
  • Better understanding of all sources of capital, not just financial
  • Greater understanding of key risks and opportunities
  • More robust, less marketing-oriented approach to reporting on non-financial issues
  • More joined-up picture of a company’s prospects

While the reports show that investors are clearly interested in integrated reporting, they also remain wary of the complexity and the fact that sometimes integrated reporting seems to be a goal in itself. The reports state: “It will be important to ensure that developments such as integrated reporting help investors to access the information they need, rather than simply burden them with even more data.”

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