May-2015

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From the Research Desk Integrated Reporting and Business Sustainability Role of CMAs • Enterprise Performance Management: An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long run. CMAs can play a pivotal role in preparation of IR report as they possess their expertise in the areas of efficiency assessment, enterprise performance evaluation, benchmarking, and evaluating the contribution of all forms of capital. They can identify the constraints faced by the organization and the gaps in information thus helping stakeholders. • Corporate Sustainability Report: Integrated reporting is actively helping us to become a better and more accountable organization. It causes us to think beyond compliance and financial reporting to deeply examine all the ways in which we deliver sustainable value, and is a highly practical way of redefining how business is done. As an internal auditor, CMAs also play a crucial role in integrated reporting. The IR Framework requires that organizations address risk management and governance areas, here the CMAs can help to prepare an effective implementation of the IR Framework by meeting requirements in the Standards related to risk management and governance. • Value Creation and Maximization: An Integrated Report provides insight into the organization’s strategic objectives, and how those objectives relate to its ability to create and sustain value over time and the resources and relationships on which the organization depends. IR is a process founded on integrated thinking that results in a periodic integrated report by an organization about value creation and maximization over time and related communications regarding aspects of value creation. The CMAs also can act as an advisor for an organization and can share their professional knowledge to prepare an effective IR. • Impact of IR on shaping the future of business: Increasingly, businesses are expected to report not just on profit but on their impact on the wider economy, society and the environment. Integrated reporting gives a view of an organization’s activities and performance in the broader context, which will enable more effective decision making at board level, improve the information available to investors and encourage more integrated thinking and business practices. The CMAs have a major role to play, in this respect through their expertise in the measurement and reporting of financial information. They need to broaden their content knowledge to include non-financial information, to implement integrated reporting both internally and externally. • Allocation of Resources: Integrated Reporting results in a broader explanation of performance than traditional reporting. In particular, it makes visible all the relevant capitals on which performance (past, present and future) depends, how the organization uses those capitals and its impact on them. In this regard, the CMAs through Resource Mapping can assist in effective allocation of scarce resources for meaningful presentation of the organization’s prospects for long term resilience and success, as well as facilitate the informational needs of, and assessments by, investors and other stakeholders. • Facilitating in Investor’s awareness: IR is needed by business and investors. Businesses need a reporting environment that is conducive to understanding and articulating their strategy, which helps to drive performance internally and attract financial capital for investment. Investors need to understand how the strategy being pursued creates value over time. The CMAs through their professional skill can prepare credible Integrated Report for better internal control and enable investors and other stakeholders to understand how an organization is really performing. 86 the MANAGEMENT ACCOUNTANT MAY <strong>2015</strong> www.icmai.in
The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) www.icmai.in MAY <strong>2015</strong> the MANAGEMENT ACCOUNTANT 87
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FROM THE EDITOR’S DESK Greetings!
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