The way firms report influences how they behave: IFAC President

IFAC President Olivia Kirtley with Finance Minister Ravi Karunanayake at the inauguration of the Global Management Accounting Summit of CMA Sri Lanka on Tuesday

By Shehana Dain

IFAC President Olivia Kirtley on Tuesday highlighted the impact good governance and transparency embedded by integrated reporting, delivering her keynote address at the Global Management Accounting Summit.

She stated that IR would increasingly provide forward-looking insights for businesses to strive forward, while minimising investors’ risk factors by providing them a base to trust a business organisation. 

“I believe that integrated reporting is tremendously important and is an insightful tool, making organisations rethink that institutional governance and transparency is critical for the future success for their business.”

Citing an example, Kirtley stated how in the late 1990s at the inception of corporate social responsibility society as a whole began to apply ‘if you do well you do good’ and how organisational governing bodies scrambled to put something into that report that illuminated a green light. 

She then explained how it all changed when the global economic meltdown happened. “We found out that this bubble concept of corporate doing right was not at all successful and we understood that it had to be built into the organisation. In fact many organisations were doing quite well by being very bad; they looked like they were doing well through their reporting.”

Kirtley elaborated how the global financial crisis changed the perception of good governance and transparency in the eyes of accounting professionals. “It became apparent that the old norms about valuation in corporate governance and how organisations were reporting needed to change and since then globalisation and instant communication changed the rules of the game. It was a time to look more closely into transparent and governance; it was a time for integrated reporting and integrated thinking.”

At the event she mentioned how the generation of the 21st century would have a prominent impact on good governance and transparency in integrated reporting. “IR is going to be crucial to attract the best and brightest of the accounting profession. It makes us more relevant to young people who want more than just a career, who want to be more than a number generator. Our next generation of leaders is going to be from the generation of instant communication.”

She stressed how the younger generation values social responsibility as a core dimension. “They are smart, they are business-oriented and they also have very strong morals of social responsibility, that’s what matters to them.” 

She added that this was yet another reason for corporates to adapt integrated reporting to ensure sustainability.