<IR> LAB INDIA: A collective of companies, investors, regulators, accounting firms and academics with the purpose of practicing and advocating Integrated Reporting in India.
A Primer to Integrated Reporting <IR>
Date: 24 May, 2016
Time: 2-3 pm
<IR> Lab India will host an introductory webinar on the concept and framework of Integrated Reporting. Focus will be on the <IR> framework, guidelines and content elements. Synergies between various frameworks, relevance to corporate reporting in India and the benefits of moving towards <IR> will be discussed. The webinar will also address commonly asked questions with regards to <IR> in India.
This webinar is ideal for practitioners, corporate professionals and academics looking to get acquainted with the concepts of <IR>. Registration details available here.
The Accountancy Profession: Adding Value Globally, Regionally and Locally
Date: 23 April, 2016
Venue: ICAI premises, BKC, Mumbai
The SAFA-IFAC Regional PAIB Forum brought together representatives form SAARC nations to discuss the issues relevant to professional accountants. A session focussing on ‘Business Success and Value Creation through Integrated Reporting’ was led by Mr. Stathis Gould, Head of PAIB and <IR> Lead, IFAC and Mr. Alan Johnson, Board Member, IFAC. Ms. Vrushali Gaud talked about the mandate and priorities for the <IR> Lab India. Members from Sri Lanka and Bangladesh presented their country's progress on <IR>.
Topic of the Month: IndAS and <IR>
<IR> Lab Newsletters are circulated every month with a focus on sharing knowledge and developments in Integrated Reporting. This month's focus will be on the new Indian Accounting Standards (IndAS) and how it complements <IR>.
Earlier this year, The Ministry of Corporate Affairs released a notification on the Indian Accounting Standards (IndAS), which are converged with International Financial Reporting Standards (IFRS). With this, the financial reporting standards in India are set to be on par with the best global standards. This month the focus is on exploring if and how the IndAS and Integrated Reporting can be leveraged together for improving corporate reporting in India
Synergies between IndAS and <IR>
By Prof. Sanjay Kallapur, Professor of Accounting, Indian School of Business
IndAS harmonised with IFRS will not only change the reported accounting numbers, but also bring more complexity as a result of the discretion it provides, and the corresponding disclosures it requires. An Integrated Report is a concise communication about how an organisation’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value over the short, medium and long term. One of its advantages is that it can bring simplicity, not only to reporting but also to the management of the organisation. Bill McDermott, CEO of SAP which has voluntarily adopted Integrated Reporting, says it allows them to tell a single unified story, beat complexity, and “run simple.” IndAS and <IR> therefore seem to be made for each other.
As it emphasises substance over form, IndAS will require lot more judgment, e.g., about fair values and existence of control over a subsidiary. Correspondingly disclosure requirements also increase. Various studies in countries that have adopted IFRS have shown a 24 percent to 60 percent increase in the size of the annual report as a result of additional disclosure requirements. While this is a good thing for sophisticated users because they will be able to get better information from such reports, it does create an information overload. Indeed on different occasions, Enron’s former CEO Jeffrey Skilling (MBA, Harvard), and Sun Microsystems’ former CEO Scott McNealy (MBA, Stanford) have publicly said accounting has become too complex for them to understand.
The problem is even more severe in emerging markets like India where there are relatively fewer sophisticated institutional investors and more unsophisticated individual investors. When the number of unsophisticated users is large, the firm has to go the extra mile to explain its numbers better. Otherwise it risks misinterpretation of its financials by investors, which will cause volatility in share prices.
<IR> provides a disciplined approach to explain the value creation process by linking (i.e., integrating) performance (financial and non-financial; short, medium, and long term) with the strategy and business model, and in turn with the external environment (opportunities and threats) and stakeholders (providers of capitals such as financial, manufactured, intellectual, human, social, and environmental). This integration or linking is a major factor in users being able to understand and make sense of the reports. It is difficult to understand disconnected facts. Integration provides the context for those facts, and thereby facilitates understanding. This is what McDermott means when he says <IR> allows SAP to run simple.
The complementary nature of <IR> with IndAS will help CFO's evolve their current reporting structures towards the new Indian Accounting Standards.
PwC IndAS Outlook Survey
PwC’s IndAS Outlook Survey gathered responses from more than 100 respondents across a variety of industry sectors and size of companies. Survey results show that IndAS will encourage a holistic approach to financial reporting that will improve information provided to investors and other stakeholders.
84% of the respondents believe financial information analysis by investors/ stakeholders will improve.
75% of the respondents expect reporting of additional non-GAAP financial measures
Transition from rule-based evaluation of control to a model which is based on judgement (substance over legal form) will involve careful analysis and evaluation
The infographic shows the impact of IndAS on various facets of business. More details about the survey are available here.
IndAS, Governance and Audit Committee
By Asish K Bhattacharyya, Business Standard
This is an article that talks about how the implementation of IndAS will bring radical changes in corporate financial reporting practices in India and a higher level of transparency. The improved quality of financial reporting will improve corporate governance because it helps investors, analysts and other stakeholders to better understand the financial position and performance of the company. However, the author points out that the full benefit of IndAS will be derived only when companies take a holistic approach and apply IndAS in true spirit. Full article can be read here.
CII-ITC Sustainability Awards recognise and reward excellence in businesses that are seeking ways to be more sustainable and inclusive in their activities.
Call for applications for CII-ITC Sustainability Awards 2016 is now open. The Brochure provides more details on the awards process and timeline. Last date for applying is 6 May, 2016.
For more information on training programmes and events please visit theCESD website
To contribute to the e-Newsletter, please contact Ms. Vrushali Gaud at email@example.com
Disclaimer: The contents of this publication can be reproduced and disseminated provided that the source is acknowledged. CII is not responsible for the content or any external Internet links included in this publication.