In February 2010, the Johannesburg Stock Exchange (JSE), through its Listings Requirements, made it compulsory for all listed companies to comply with the King Code of Governance Principles for South Africa 2009 ("King III"), which includes the requirement for a company to produce an integrated report for its financial year starting on and after 1 March 2010, or to explain why it was not doing so. The IRC was established in May 2010 to develop guidelines on good practice in integrated reporting in meeting these requirements.

The IRC Discussion Paper is designed to provide principles and guidance on the creation of an integrated report. It discusses the key reporting principles (scope, boundaries, content), suggested elements to be included in the integrated report and assurance on reported information.

An extract from the Discussion Paper follows:

"... the overarching objective of integrated reporting is to enable stakeholders to assess the ability of an organisation to create and sustain value over the short-, medium- and long-term. The users of an organisation's integrated report should be able to determine from the report whether the organisation's governing structure has sufficiently applied its collective mind in identifying the social, environmental, economic and financial issues that impact on the organisation's business, and whether these issues have been appropriately incorporated into its strategy. An integrated report is not simply an amalgamation of the financial statements and the sustainability report. It incorporates, in clear language, material information from these and other sources to enable stakeholders to evaluate the organisation's performance and to make an informed assessment about its ability to create and sustain value. An integrated report should provide stakeholders with a concise overview of an organisation, integrating and connecting important information about strategy, risks and opportunities and relating them to social, environmental, economic and financial issues."

The International Integrated Reporting Committee (IIRC), formed in July 2010, also aims to issue an international discussion paper later in 2011 and include integrated reporting on the agenda of the G20 meeting in November 2011. However, the urgent need for guidance in South Africa has seen the issue of the Discussion Paper in advance of global initiatives, and may be a useful indicator of what may emerge globally.

The Discussion Paper is open for comment until 25 April 2011. Click for press release (link to Sustainability SA website, Word document).

The report calls for fundamental changes to the system of standard setting, including the creation of a new board, to be overseen by the FAF, that would focus on making exceptions and modifications to U.S. GAAP for private companies that better respond to the needs of the private company sector. The report also recommends the creation of a differential framework (a set of decision criteria) to facilitate a standard setter's ability to make appropriate, justifiable exceptions and modifications. The report does not advocate a move toward a separate, self-contained GAAP for private companies or a comprehensive reorganisation of GAAP.

The report confirms the Panel's view that mandating the use of the IFRS for SMEs in the United States is not appropriate at the current time. However, because the AICPA now recognises the IASB as an authoritative standard setter, in many instances private companies (other than financial institutions) may also report under IFRS or IFRS for SMEs. An extract follows:

U.S. private companies should not be leading the charge, en masse, to an IFRS-based set of standards before the SEC makes a decision on U.S. public companies, especially given the extent of change management efforts that private company stakeholders might have to undertake.

Click for FAF press release (link to FAF website)

Yesterday, the FASB tentatively decided to permit accounting for financial assets for which an entity's business strategy is managing the assets for the collection of contractual cash flows through a lending or customer financing activity at amortized cost. This reversal from the original idea of requiring accounting for most types of financial instruments, including bank loans, at fair value brings the FASB closer to the mixed measurement approach adopted by the International Accounting Standards Board (IASB) under which some assets would be reported at fair value and others at amortized cost.

Click for:

• FASB Summary of Board decisions concerning the accounting for financial instruments (link to FASB website)
• Our Financial Instruments project page

 

The World Bank and the IFRS Foundation were invited to hold a workshop in Astana to present the main features of the standard. Around 50 participants from the prime-minister's office, ministry of finance, state property commission, financial control commission, tax and customs authorities, professional accounting bodies and universities attended the workshop. The Government of Kazakhstan is currently considering whether to adopt the IFRS for SMEs for business entities which are not Public Interest Entities (PIEs) in place of the existing Kazakh National Accounting Standards (KNAS). After the workshop Michael Wells from the IFRS Foundation said: "Seventy countries are either using or are planning to consider using the IFRS for SMEs standard in the next few years. I hope that Kazakhstan will be the first country in Central Asia to adopt the standard."

Click for:

• World Bank press release (link to World Bank website)
• Our country page Kazakhstan
• Our summary of the IFRS for SMEs

 

The report, sponsored by the German Federal Ministry of Education and Research, presents the results of an international survey undertaken by the Climate Change Working Group (CCWG) of the UNEP FI and the SBI. More than 60 institutions, from both developed and developing countries, took part in the survey.

The report concludes the availability of and access to climate change information remains insufficient. It notes the increasing financial relevance of climate change and highlights the fact that insurers and lenders need better information regarding the physical and economic impacts of the world's changing weather patterns.

The survey identified that information gaps can be closed by continued research towards more reliable climate modelling and forecasting, as well as enhanced translation of scientific knowledge and existing information into user-friendly information.

Click for press release (link to United Nations Environment Programme website).

Click for our earlier story on Request for views: Effective date and transition methods.

He summarises the discussions at the joint board meeting in January, considers the feedback received in the comment letters and provides an overview of the planned discussions at the next joint board meeting in February.

Click for:

• Access to the podcast (link to IASB website)
• Our Insurance Contracts project page

 

Topic: ED Financial Asset and Financial Liability Offsetting Date and time: Monday, 31 January 2011, 10:00 GMT and repeated 15:00 GMT More information on the webcast and registration: click here More information on IAS Plus: Our summary of the IASB's project on Asset and liability offsetting

• A discussion paper, The Evolving Nature of Financial Reporting: Disclosure and Its Audit Implications, which highlights recent trends in the range, volume, and complexity of financial statement disclosures, and explores issues and practical challenges in preparing, auditing, and using them. The Discussion Paper has been prepared using the disclosures required by IFRSs as a frame of reference. Comments on the discussion paper close on 1 June 2011
• A publication, Audit Quality: An IAASB Perspective, designed to stimulate further debate on audit quality and further the IAASB's efforts to facilitate robust audits in the public interest.

Click for IAASB press release (link to IFAC website).

The new Arabic Guidelines are a result of collaboration between GRI and The Egyptian Corporate Responsibility Center (ECRC).

The GRI Sustainability Reporting Framework is designed to enable large and small companies, non-profit organisations and government bodies worldwide to assess their sustainability performance and disclose the results. The Arabic Guidelines will enable organisations in the Middle East to be more transparent about their sustainability performance, supporting GRI's goal to "mainstream" sustainability reporting worldwide.

Also, GRI's Focal Point USA will be officially launched at the New York Stock Exchange on Monday 31 January 2011. The Focal Point USA began operations in October 2010 and aims to address the needs of the unique marketplace in the USA and to boost the quality and quantity of sustainability reports coming from US organizations. The rapidly upward trend in sustainability reporting globally, and particularly in Europe, has not been mirrored in the USA yet.

Click for GRI press releases (links to GRI website):

• GRI press release on new Arabic Guidelines
• GRI press release on new Focal Point USA