May-2015

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COVER PRESIDENT’S STORY COMMUNIQUE enterprise, optimises IT resources and helps realigning strategies required to achieve the organisational goals on a sustained basis. Linkage between IR and EPM There appears to be a very strong association between the IR and EPM as both these tools simultaneously serves the requirements of the entity and its stakeholders. If both these techniques can be merged and designated as ‘Enterprise Pervasive Performance Reporting’, will represent a broader expression of the company’s deliverables, its financial stability, readiness for achieving scalability and sustainability through riskier times. Extensive use of EPM and IR will bring in its wake applications of other tools like, Life Cycle Costing for products and related capital assets, Activity Base Costing, Balance Score Card, EVA based incentivisation and so on. This will in turn facilitate improved generation of costing information based on ground realities and analyses with more predictive capabilities, understandability, relevance, reliability, comparability, constructive review and initiating managerial actions for prosperity.EPM, when implemented and practiced with right earnest, will serve in extremely good stead for the management to use IR as a business strategy for all meaningful purposes to the benefit of the entity. The community of investors and external stakeholders will not be required to depend upon the research reports of Analysts, who can only attempt to have an insight into an entity through financial numbers of the past and predicting the same for future based on their own understanding about the business from distance. However, it is still a major issue as to how to correlate the ESG aspects with financial performance for better understanding and adaptability. Conclusion and Role for CMAs Information is essential for the survival of any business. The time tested axiom called survival of the fittest validates the essential necessity of IR as a tool and its interphase with EPM. A close co-ordination between IR and EPM is essential to achieve one single goal i.e. benefit of all stakeholders at large. Unless one knows the analytical realities of the past, prediction for the future, with practical assumptions and reasonable certainty, seems to be extremely challenging. It is essential to develop relational analyses of variables as it is difficult to distinguish and and link ESG related points to financial information. Nonetheless, there are plenty of risks and difficulties in integration and alignment of ESG data. External analysts also lack adequate knowledge about non-financial information, such as environmental and social aspects, which results in such information not being used for evaluation. Secondly, the difficulties to quantify non-financial information make judgments more complex. Hence, it is concluded that the reporting of the relationship between financial and non-financial information needs to be internally developed through EPM for visualising positive impacts where sustainability is core to any business model. Further, IR through EPM could be useful to external value investors by providing a more comprehensive overview of opportunities and risks from the perspective of the economy, environment and society at large.IR through EPM is potentially one of the most significant changes towards corporate reporting in near future. CMAs are very well equipped to bring all the above into reality. Their role should transform from score watchers to value integrators as EPM will essentially call for more management accounting oriented and analytically processed inputs for leadership team to navigate the business towards prosperity, winning the confidence and support of external stakeholders through Integrated Reporting. References 1. The International Integrated Reporting Counicl (2013),Towards Integrated Reporting: Communicating Value in the 21st Century,http://www.theiirc.org/ wp-content/uploads/Consultation-Draft/ Consultation-Draft-of-the-International- IRFramework.pdf 2. Peeva,G&Noetzel, T., (2009), Integrating ESG into Mainstream Investing and Research, Pre-conference paper, the future of ESG integration by responsible-investor. 3. Ariyachandra, T. R. and Frolick, M. N. (2008), Critical Success Factors in Business Performance Management - Striving for Success. 4. Schultz, G. J. (2004). "Enterprise Performance Management: Strategic Decision Analytics from Deep Data." Information Strategy: The Executive's Journal 20(3): 14-24. 5. Bititci, U. M., Turner, T. and Begemann, C. (2000). Dynamics of Performance Measurement Systems." International Journal of Operations &Production Management. 6. A Leader’s Guide to Understanding Complex Organisations: An Expanded ‘7-S’ Perspective, Darden Publishing, University of Virginia, UV 3148. 7. Dr. Paritosh C. Basu, (2001), Cost and Management Accountants’ Vision in the Emerging Business Environment, 42nd National Convention Paper, The Management Accountant, January, 2001. Paritosh.Basu@nmims.edu 26 the MANAGEMENT ACCOUNTANT MAY <strong>2015</strong> www.icmai.in
INTEGRATED REPORTING – WALK THE TALK Even though the benefits of Integrated Reporting are largely understood, the development and acceptability of the concept is yet tardy. Unless the companies reach a level where they feel that the apprehensions are not insurmountable they will not be able to walk the talk CMA Dr S K Gupta Vice President, Spentex Industries Limited, Delhi The world is changing…Corporate Reporting too must change HISTORICALLY, corporate reporting has been focused mainly on the financial performance of companies. It provided investors with basic insight into the historic performance of the companies evaluated on key financial indicators. This helped provide the readers with indication of the companies present and potential future performance. Of late increasingly, annual reports have attempted to include sections on the corporate strategies, social and environment concerns and actions being taken by the company to work responsibly in these areas to promote community well being. Despite addition of in- www.icmai.in MAY <strong>2015</strong> the MANAGEMENT ACCOUNTANT 27
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EMA EMA FOR SUSTAINABLE DEVELOPMENT
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2. assessment of total environment
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National Seminar on "Capital Market
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ECONOMY UPDATES Income Tax CBDT Not
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Interest Rates on Deposits In refer
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ISSN 0972-3528 Registered KOL RMS/1
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May-2015

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