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PAIB eNews July 2011
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July 11, 2011
Welcome to IFAC's Professional Accountants in Business (PAIB) Committee eNews
1. New XBRL Paper Released by IFAC and ISACA
IFAC and ISACA recently released a joint paper, Leveraging XBRL for Value in Organizations, which provides guidance for accounting and assurance professionals in helping their organizations gain value from XBRL (eXtensible Business Reporting Language), a universal language of business reporting that is increasingly being used for both external and internal reporting. The paper discusses the two main reasons XBRL is of value to organizations: more and more public authorities require organizations to file financial reports in XBRL format, and XBRL can bring other benefits to an organization when used for more than just fulfilling a compliance requirement. For example, organizations can leverage XBRL for value by embedding XBRL within internal processes to enhance the effectiveness, efficiency, and reliability of management communication. Examples and case studies of the ways XBRL can be applied in organizations are included in the paper. A listing of additional XBRL resources from other professional accountancy organizations, international companies, and the most recent World Congress of Accountants is also available.
2. Predictive Business Analytics Exposure Draft Released by PAIB Committee
As part of the International Good Practice Guidance series, the PAIB Committee recently released proposed guidance on predictive analytics. Predictive Business Analytics: Forward-Looking Measures to Improve Business Performance is designed to help professional accountants in business, as well as their organizations, embrace predictive analytics to achieve better forward-looking performance insights. Predictive business analytics help professional accountants anticipate future events, forecast possible outcomes, and select actions and decisions to improve the performance of their organizations in response to changing market and industry dynamics.
Professional accountancy organizations and other interested parties are encouraged to respond to the proposed guidance and help improve its applicability to professional accountants in organizations of all sizes. The comment deadline for the exposure draft is July 29, 2011.
The PAIB Committee's other International Good Practice is available through the Publications and Resources section of the IFAC website.
3. Corporate Governance Roundtable Held at CReCER
Alan Johnson, a member of the PAIB Committee, recently lead a roundtable entitled "Corporate Governance: Current Challenges and Key Success Factors" at CReCER 2011 in late June. CReCER (Accounting and Accountability for Regional Economic Growth) is a regional event organized by the World Bank, IFAC, the Inter-American Development Bank, the Global Public Policy Committee, which is comprised of the six largest auditing firms in the world, and the Argentine Federation of Professional Councils in Economic Sciences. Mr. Johnson's presentation included two key messages: poor governance affects everyone, which the 2008 financial crisis demonstrated, and good governance supports building sustainable value in business and society.
4. Integrated Reporting Discussion Forum in Melbourne
Together with CPA Australia and the Institute of Chartered Accountants in Australia, the Professional Accountants in Business (PAIB) Committee held a forum for PAIBs in May. The forum was held in conjunction with the PAIB Committee meeting in Melbourne and attended by approximately 150 participants. The focus of the forum was on how professional accountants in business can support their organizations to improve governance practices through integrated reporting.
Discussions at the forum included how integrated reporting can drive good governance practices, including new systems and processes to measure, analyze, and report an organization's environmental, social, and economic performance. The main conclusions of the forum were:
• Integrated reporting needs to reflect an organization's strategy and values, as well as how it is managed in all social, environmental, and economic dimensions of performance;
• The process of integrated reporting, in turn, is a powerful tool to help drive an organization's strategic agenda, providing management with key drivers of performance;
• Integrated reporting has to be balanced and transparent by reflecting both improvements in performance as well as weaknesses; and
• Pension fund investors, as well as some other institutional investors, are increasingly analyzing environmental, social, and governance factors to understand how an organization's strategy and operations are affecting financial and other key measures of performance.
Additional information regarding the forum is available in the Media Center on IFAC's website. Integrated reporting is further explained in part three of the Reporting Perspective of IFAC's Sustainability Framework.
5. Integrated Reporting Pilot Programme Begun by IIRC
The International Integrated Reporting Committee (IIRC) recently held the second in a series of global meetings to discuss proposals for an integrated reporting framework. These conversations are helping to shape the forthcoming discussion paper, which will set out the drivers and key principals of integrated reporting as well as request input on the IIRC's further developments, including creation of an International Integrated Reporting Framework within two years. The IIRC's discussion paper is expected to be released for public consultation during the third quarter of 2011.
To complement the discussion paper, the IIRC recently launched its Pilot Programme, offering select companies the opportunity to test the International Integrated Reporting Framework in advance of its release. The Pilot Programme will consist of three phases:
• A dry run, asking companies to do a walk-through of the framework and identify the opportunities and challenges of implementation, which will inform the pilot kick-off conference and discussion paper consultation in October 2011;
• Cycle 1, the first round of piloting, based on the discussion paper and draft framework for reporting periods ending between October 2011 and September 2012; and
• Cycle 2, a second round of piloting, which will build on experiences from the first year of testing.
The Pilot Programme will include companies from a variety of fields and the investor community, with support from the IIRC Secretariat and peer group feedback from participants in the program. Although the deadline for participation in the dry run stage has passed, the IIRC is accepting applications for participation in cycles one and two until July 29, 2011, and is especially interested in applications from organizations in Latin America, South and East Asia, North and Southern Africa, and the Middle East. More information is available through the IIRC website.
6. Business and Integrated Reporting News Briefs
In the past few months, there has been an increased focus on business reporting globally, particularly the development of integrated reporting. Collected here are summaries of some of these developments.
• New Report from CIMA Addresses the Future of Corporate Reporting
According to a new report published by the Chartered Institute of Management Accountants (CIMA), PwC, and the think tank Tomorrow's Company, the future of corporate reporting is at a critical point. The report, Tomorrow's Corporate Reporting: A Critical System at Risk, argues that corporate reporting needs to be able to evolve to meet society's changing needs. For more information, please see the press release and CIMA's website.
• Ceres-ACCA North American Awards for Sustainability Report Goes to Nike
Ceres and the Association of Chartered Certified Accountants (ACCA) have awarded the Ceres-ACCA North American Awards for Sustainability Reporting to Nike. The report addressed the new context within which business must operate-one with a rising global population, decreasing natural resources, and an unstable climate-and reveals how Nike, in an effort to take a competitive advantage, is shifting to a more sustainable business model. The Ceres-ACCA Reporting Awards program aims to recognize excellence in reporting on sustainability performance by corporations and other organizations in the United States, Canada, and Mexico, as well as provide guidance for other organizations that publish or plan to publish sustainability or corporate social responsibility reports. For more information regarding the selection process and the 17 organizations that were finalists, please see the Ceres website.
• Puma Becomes First Major Company to Release Environmental P&L Statement
With the release of initial results from its Environmental Profit & Loss Account, footwear company Puma recently became the first major international company to put an economic value on greenhouse gas emissions and water consumption within Puma's operations and supply chain. Puma and its parent company, PPR Group, have made a commitment to changing the way they account for use of natural resources and say that, within four years, half of Puma's products will be manufactured according to its internal sustainability standard-including using more sustainable materials, such as recycled polyester, as well as ensuring its suppliers develop more sustainable materials and products. For more information, please visit The Guardian's website.
• Vancity Receives Award for Integrated Annual Report
The Canadian company Vancity (Vancouver City Saving Credit Union) was awarded the Globe Sustainability Reporting Award 2011 for issuing its first integrated annual report that provides stakeholders with a clear understanding of the significance of sustainability impacts on key business activities, and the strategic actions taken in response to these impacts. The Globe Sustainability Reporting Awards are bestowed by the Globe Forum in Stockholm, Sweden, to encourage researchers, innovators, cities, and companies in sustainable development.
• M&S Issues Status Update Report Covering Sustainability
Marks&Spencer (M&S) has published Your M&S: How We Do Business Report 2011, which includes updates on its 180 ecological and ethical commitments, many of which have initial deadlines in 2012. M&S' Plan A: Doing the Right Thing was launched in January 2007, setting 100 commitments M&S planned to achieve in five years. Plan A has now been extended to 180 commitments to achieve by 2015, with the ultimate goal of becoming the world's most sustainable major retailer. Key highlights over the last twelve months include a 13% reduction in carbon emissions, a 23% improvement in energy efficiency, a 34% reduction in waste, and a 94% recycling rate. Additionally, M&S says the report is, for the first time, fully assured using a combination of internal and external audit. Additional details are available in the press release from M&S.
• New Sustainability Report From L'Oréal
L'Oréal has published its 2010 Sustainable Development Report in the form of an integrated website, which contains videos that feature international leaders discussing sustainability topics with L'Oréal leadership. The paper includes the framework for L'Oréal's policies on corporate governance, environmental stewardship, health and safety, social affairs and diversity, supplier relations, sustainable innovations, consumer responsibility, and philanthropy.
7. IAASB Seeks Comment on Enhancing the Value of Auditor Reporting
The International Auditing and Assurance Standards Board recently released for comment Enhancing the Value of Auditor Reporting: Exploring Options for Change, which looks to obtain views on enhancing the quality, relevance, and value of auditor repointing on an international basis. The consultation paper describes issues with current auditor reporting, including a perceived "information gap," identified by some stakeholders, between what they need to make informed investment decisions and what is available to them through audited financial statements . It also sets out possible options for change and seeks input as to whether such options might be effective in enhancing auditor reporting and the communicative value of the auditor's report.
As this consultation paper specifically seeks the views of those outside the audit function, responses to the paper are requested from professional accountants in business working in all functions throughout their organizations. The comment deadline for the consultation paper is September 16, 2011.
8. Recent PAIB Committee Publications
Reports and papers recently published by the PAIB Committee are available through the International Center for Professional Accountants in Business on the IFAC website, including:
Integrating the Business Reporting Supply Chain
Global Survey on Risk Management and Internal Control
To comment or inquire about any of the items mentioned above or for questions about the PAIB Committee, please contact communications@ifac.org.
About the PAIB Committee and IFAC
The PAIB Committee serves IFAC member bodies and the more than one million professional accountants worldwide who work in commerce, industry, financial services, education, and the public and not-for-profit sectors. Its aim is to promote and contribute to the value of professional accountants in business by increasing awareness of the important roles professional accountants play, supporting member bodies in enhancing the competence of their members, and facilitating the communication and sharing of good practices and ideas.
IFAC is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.
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