Shaping the Future of Corporate Reporting

By Alan Willis, FCPA, FCA (excerpted from his article in the Summer 2019 issue of ThinkTWENTY20)

Today’s corporate reporting landscape has grown piecemeal and disjointedly over many decades, from a time when the business landscape and concept of corporate accountability were very different from today’s. Imagine resetting the clock, as if today we could boldly rethink, reinvent and redesign all of external corporate reporting to reflect the realities and context of the 21st century in which businesses must operate.

Suppose we were to consider separately the reporting expectations of (a) a company’s “providers of financial capital” (investors, lenders and creditors) and (b) other stakeholders and the general public whose interests are, or are likely to be, influenced by a given corporate business enterprise (and who may in turn influence company policy and action). This idea can be evidenced in contemporary thinking and jurisprudence about the purpose of a corporation, its accountabilities to investors and to other stakeholders, and directors’ duties and responsibilities.[i] Reporting would be designed in a holistic, connected manner, not piecemeal and fragmented. South Africa’s King IV Report on Corporate Governance[ii] is the pioneering example today of such integrated thinking about governance, accountability and disclosure. 

We need to consider each of these two broad categories of reporting expectations in turn and their respective information needs, seen through a value creation and accountability lens, i.e., one that considers the decisions and judgments that (a) investors and (b) other stakeholders   respectively want to be able to make about value creation by the company and the quality of its governance. Value is considered relative to changes in, and impacts on, each of six connected capitals on which value creation depends: financial, manufactured (i.e., infrastructure, plant & equipment), human, intellectual, social and natural, as described in the IIRC Integrated Reporting Framework.[iii]

We also need to imagine that every company maintains an integrated data base of all the information, qualitative and quantitative, financial (transactions and events) and “non-financial” (other performance data points and events) that is drawn upon for all internal as well as external reporting purposes. Design of this data base has to incorporate the necessary systems, procedures and controls to ensure its integrity.

Two small signs of hope should be noted here. First, in 2015 the IIRC convened a “Corporate Reporting Dialogue”[iv] among leading global corporate reporting standard setters and regulators. It aims for collaboration in cutting through this jungle and the ensuing reporting clutter, with a view to suggesting the most effective and efficient way of meeting investors’ information needs. It is currently undertaking a “Better Alignment”[v] project that seems timely to cut through the jungle described above.

Second, the International Accounting Standards Board (IASB) has recently started a project[vi] to update its 2010 Practice Statement on Management Commentary (MD&A in North American lingo) to better incorporate what investors need to know as broader context for understanding the related financial statements and what they say (or do not and cannot say) about value creation, e.g., a company’s business model, the present and likely future economic environments in which it is operating, the extent to which environmental and social issues are among the principal business risks and opportunities a company faces, etc.

We now have the opportunity to examine and consider how all the various reporting channels, standards and frameworks, financial and otherwise, mandatory and voluntary, might be harnessed, integrated and – where necessary – modified or enhanced into two broad reporting “bundles” that respectively meet the needs of (a) investors (“providers of financial capital”) and (b) other stakeholders. 

For a free copy of the Summer 2019 issue of ThinkTWENTY20, click here.

[i] See for example

[ii] https://www.adams/wp.content/uploads/2016/11/King-IV-Report.pdf.




[vi] See and recent speech by IASB chair: