ACCA survey highlights that companies are adopting a ‘wait and see’ approach to integrated reporting

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18 Feb 2014

The Association of Chartered Certified Accountants (ACCA) has issued a report, ‘Understanding investors: the changing corporate perspective' which is the last in a four-part series examining what investors want from corporate reporting. The report has a particular emphasis on respondent’s views on real-time reporting and moving to an integrated reporting model and also considers the relationships between Chief Financial Officers (CFOs) and their auditors.

The report which is based on a survey of 200 CFOs and “other senior finance professionals” (“CFOs”) indicates that CFOs see benefits to an integrated reporting model including enabling them to “align the company’s risks with its opportunities, adopt a more holistic view of the true drivers of corporate performance, and build better relationships with external stakeholders”.  Past research by the ACCA in their report, Understanding investors: direction for corporate reporting, also indicated “strong support for integrated reporting among investors” with 93 per-cent of those investors surveyed supporting the concept of integrated reporting.  

However, despite the benefits and investor appetite, the majority of companies (48 per-cent) surveyed are choosing to adopt a ‘wait and see’ approach to integrated reporting and 10 per-cent of those surveyed “have no intention” of moving towards an integrated reporting model unless it becomes compulsory. Only 38 per-cent of those surveyed are taking active steps to move towards an integrated reporting model in the next three years and only 5 per-cent have already implemented one and published an integrated report.  

The report also shows “cautious support” from CFOs for the adoption of real-time reporting even though there is “genuine demand” from investors as highlighted in an earlier ACCA report, Understanding investors: the road to real-time reporting, published in September 2013. This showed that “70 per-cent of investors said that companies reporting in real time would have an advantage in attracting investment” and “73 per-cent would consider companies that report in real-time to have more robust corporate governance”.  

Many CFOs (two-thirds) would “welcome” a move to real-time reporting but fear that this “could compromise competition-sensitive information and lead to misstatements”. A number of CFOs also indicated that there were obstacles to implementing an effective real-time reporting system such as “the difficulty in instituting effective controls to ensure accuracy” (45 per-cent) and 60 per-cent of CFOs “see auditors as the biggest barrier to real-time reporting”. 

To support a real-time reporting approach the report highlights that CFOs have the challenge to speed up their reporting processes and that many companies have made the effort to take the necessary steps to achieve this. The findings show that CFOs believe that there are benefits of a faster close process with 63 per-cent indicating that “a key benefit of a faster close is that external stakeholders see it as a sign of good management”.     

With regards to the relationships with external auditors, CFOs indicated that although relationships are good, there were certain areas in the audit profession where they would like to see improvements. Key highlights are that 60 per-cent of respondents would like lower audit fees, 47 per-cent would like more competition between audit firms and 45 per-cent would like to see more frequent communication with their auditors.

The full report can be obtained from the ACCA website.

The other three reports in the series are:

  • Understanding investors: direction for corporate reporting and Understanding investors: the changing landscape were published in June 2013
  • Understanding investors: the road to real-time reporting published in September 2013 

Not part of the series but also investor focused is the ACCA survey, What do investors expect from non-financial reporting?, published in July 2013.

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