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Integrated Reporting Framework: IR could be the key that enables capital markets to focus on long term value, says KPMG

Integrated Reporting Framework: IR could be the k...

But reports produced under the Framework need to stay focused on meeting investor needs


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KPMG has welcomed the publication of the International Integrated Reporting Council’s (IIRC) Draft Integrated Reporting Framework as an important step on the journey towards better business reporting that could ultimately address the gap between reporting content and business value.  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.

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.”

"KPMG in Russia and the CIS plays an active role in the work of the Russian Regional Integrated Reporting Network and wholly supports the IIRC's initiative," said Igor Korotetskiy, Head of Corporate Governance and Sustainability Group in KPMG Russia and CIS. "It is particularly pleasing that a number of Russian companies are taking place in the pilot programme. Without doubt, Russian companies seeking to improve their corporate reporting need to take account of the global trend towards integration of financial and non-financial information, as well as the growing investor requirements for disclosure of information on fundamental value drivers. Furthermore, given the ongoing development of non-financial reporting and infrastructure systems in this area, we recommend that our clients take a considered and gradual approach to introducing integrated reporting. This will make it possible to minimise the reputation and legal risks associated with potential data quality and reliability issues," added Igor Korotetskiy.

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