IIRC gets the ball rolling on assurance

27 Aug 2014

For Integrated Reporting to take root, credibility of information is key. So what level of assurance is needed? A new report starts the conversation.

The International Integrated Reporting Council has said that short-term innovations in assurance are needed to address particular areas of concern in the practice of integrated reporting. But in their discussion paper entitled ‘Assurance on IR, an exploration of the issues’, the organisation says that it is only starting the debate and isn’t proposing solutions or developing assurance standards.

The paper is a response to comments received on the Consultation Draft of the IR Framework. Many respondents to that framework view some form of assurance as essential for enhancing the credibility and ensuring the reliability of the integrated reporting process. The assurance paper highlights five main critical issues including what current standards can be used to assure IR now, what levels of assurance would be appropriate and whether assurance is required in the preparation of the report itself.

But with many businesses attempting an integrated report, many for the first time, there is a strong focus on that issue – the need for assurance so that providers of financial capital can have confidence that they have a clearer window into company results and forward-looking information.

“We would support the view that short-term innovation is needed” said Mark O’Sullivan, a Corporate Reporting Director at PwC. “Less mature, and evolving, aspects of companies’ reporting might not yet be capable of being assured under today’s assurance model. Insight into the maturity of such information, for example, might help build trust in the shorter term and allow a company’s integrated reporting to mature.”

Short-term assurance solutions, the IIRC says, are also particularly important because they will enhance the application of the framework and its comparability as the form and best understanding of integrated thinking and reporting develops over time.

But while it recognises the need for assurance solutions, the IIRC is happy to recognise that the market will lead the hunt – its paper only aims to draw out the important issues from the assurance practitioner’s perspective and start a debate around addressing those. It also assumes that assurance methodologies will evolve as integrated reporting evolves and that ideas such as a single, integrated approach to assurance may be necessary in order to achieve the goal of an integrated report.