The newly formed Report Leadership Group has unveiled an initiative aimed at engendering debate and discussion on how the reporting model can be enhanced to better meet investor needs. The Group, comprised of the
Chartered Institute of Management Accountants (CIMA),
PricewaterhouseCoopers, communications consultancy
Radley Yeldar and
Tomkins plc, asserted that corporate reporting needs to move in a new direction if it is to command a central role in the communication of performance.
The Group believes that corporate reporting should be more relevant, informative and accessible. It should provide investors with what they want without inundating them with unnecessary detail. In its view, this means understanding that corporate reporting goes well beyond issues of measurement and accounting.
Kevin Egan, Assurance Leader, PricewaterhouseCoopers Ireland commented:
"Management spends significant time aggregating and recalculating data from internal sources to construct the figures demanded by regulatory reporting. As part of the initiative, Report Leadership seeks to align external reporting more closely with management reporting, recognise the complexity of business today and provide reporting that will adapt readily to all stakeholders".
To bring its ideas alive the group has demonstrated how these can be applied in extracts from the annual report of an example company, "Generico". The annual report was the chosen presentation vehicle but the group recognises that in reality this report is increasingly seen as a compliance document. However, the real message of this initiative is to reinforce the information set that is important to investors and the way that it is structured.
Group member, Ken Lever, finance director of Tomkins plc, said:
"Report Leadership believes that it is easy to knock existing models, but more useful to propose alternatives. We believe this document provides real practical ideas that can be applied today. For some companies the disclosures will have gone too far, but our intention was to challenge established thinking".
To make its ideas practical and realistic, the Group focused on what is achievable today within current Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS) models by improving disclosure and presentation of information. It also focused on three areas of topical interest:
- Effective communication through clear messaging and navigation:
Richard Carpenter, development director at Radley Yeldar, said:
"Corporate reporting has reached an impasse with many companies simply ticking the regulatory boxes. Few take a step back and look at their reporting as a whole - or consider what their audiences actually want. I hope that Report Leadership will encourage a few more companies to think about those issues".
- Modelling the future through the provision of contextual information that allows investors to assess the quality and sustainability of future cash flows:
Tiarnan O'Mahony, President, CIMA, Republic of Ireland, said:
"In essence, external reporting should provide a synopsis of pertinent and useful management information that is used in board discussions. Report Leadership seeks to align external reporting with management reporting and uses some practical examples of how this might happen".
- Rethinking the financials to provide greater detail on revenue, costs, segmental information, pensions and debt:
Kevin Egan, Assurance Leader, PricewaterhouseCoopers said:
"We want to promote further thinking and debate around corporate reporting at this important time when the FASB and IASB are embarking on their conceptual framework project".
Notes to Editors:
1. About Report Leadership
Report Leadership is a multi-stakeholder group that aims to challenge established thinking in corporate reporting. The contributors to this initiative are the Chartered Institute of Management Accountants (CIMA), PricewaterhouseCoopers, Radley Yeldar and Tomkins plc.
Individuals can help shape the way the Report Leadership project evolves by giving comments, actively participating, or adopting elements of the proposed blueprint. On-going developments can be seen at www.reportleadership.com.
Journalists requiring a copy of the corporate reporting guidance document "Report Leadership: tomorrow's reporting today" or the Generico annual report, please contact Johanna Dehaene on +353 1 792 6547 or email: johanna.dehaene@ie.pwc.com
2. About CIMA
The Chartered Institute of Management Accountants is a leading membership body that offers an internationally recognised professional qualification in management accountancy, which focuses on accounting in business. http://www.cimaglobal.com.
3. About Radley Yeldar
Radley Yeldar is a creative communications consultancy offering a range of specialist services including brand identity, corporate reporting, corporate responsibility, digital media, internal communications and marketing communications. http://www.ry.com.
4. About Tomkins
Tomkins plc is a global engineering and manufacturing group listed on the London and New York stock exchanges. Tomkins operates over 130 manufacturing facilities, employs some 37,000 people worldwide and had annual sales of approximately £3 billion in 2005. http://www.tomkins.co.uk.
About PricewaterhouseCoopers
The member firms of the PricewaterhouseCoopers (www.pwc.com/ie) network provide industry focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 140,000 people in 149 countries across our network work collaboratively using connected thinking to develop fresh perspectives and practical advice.
