With integrated reporting gaining recognition across corporate Sri Lanka, the increasing need for businesses to embrace and interlink integrated thinking with integrated reporting (IR) was highlighted at a workshop organised by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and the Integrated Reporting Council of Sri Lanka (IRCSL).
Chairman of IRCSL Asite Talwatte, set the tone of the workshop on ‘Integrated Reporting: Moving Beyond the Basics’ by sharing statistics on the steady growth of integrated reporting adopted by corporates in the country. “In 2014, we saw about 20 companies adopting the integrated reporting framework, however this number increased to nearly 50 companies by 2018,” he said.
Integrated reporting and climate change are seen as the perfect marriage to address important sustainability issues as it goes beyond conventional financial information, thereby helping create value and sustainability, all while helping organisations play a more responsible and valuable role.
With Sri Lanka currently suffering from daily power outages and regular waters cuts, CA Sri Lanka President Jagath Perera highlighted the important nexus between safeguarding resources and the role integrated reporting and integrated thinking. “These power and water cuts finally burns down to how we manage our resources, and therefore, integrated reporting is an important framework which will tell you how you can manage these resources for the future generations as well,” Mr. Perera said.
According to Raja Senanayake, integrated reporting is nothing but communicating that story of creating value for all the stakeholders of a corporate in the short, medium and long term. “Let’s admit one thing at the outset. Given the diversity of audiences and their conflicting interests, producing an effective annual report is not easy. Given that too much information, not well told results in the reader being unable to see the wood for the trees. At the same time, too little detail, however well told, gives the impression of information being withheld. Report preparers need to strike that delicate balance between compliance and communication,” Senanayake who serves as the Head of Process Development at Smart Media (Pvt) Ltd said.
With companies only simply reporting on historical performance unlikely to inspire confidence among the stakeholders, he urged corporates to practice integrated thinking and make the business model more sustainable.
With the increasing need for corporates to interweave integrated thinking into the IR framework, the important role of the c-suite was also highlighted during the workshop. According to Director of SheConsults (Pvt) Ltd Aruni Rajakarier, changing the mindset and the skillsets are important in embedding integrated thinking while driving forward integrated reporting.
Partner of KPMG Ranjani Joseph highlighted that as a relatively new framework, IR was still evolving and therefore the assurance factor on integrated reporting also needs to evolve alongside the practice of reporting itself. “But, it’s a long journey, and there is a lot of improvement that needs to be done both from the assurance providers perspective and prepares perspective and ultimately give credibility to all what we are reporting,” Joseph added.
The workshop also touched upon how technology can be an enabler in helping facilitate integrated thinking among corporates.
Senior Manager - Financial Accounting Advisory Services of Ernst & Young Hathim Sabry believes that technology will play a critical role in the context of modern business and integrated thinking. To reach this goal, he emphasized the increasingly need for CFOs to look beyond financial information, and to make decisions based on data.
Director of Forestpin (Pvt) Ltd, Dilanke Hettiaratchi also continued on the important role technology can play in terms of the IR framework as well as integrated thinking. He was of the view that analytics and alerts can be hugely beneficial in providing accurate information, while also saving time and money and most important helping make informed decision on strategy. Another benefit of analytics and alerts was the reduction in operational risks, he says.
The detailed presentations by the resource personnel was followed by a panel discussion. Sharing her views, panelist Prof. Samanthi Senaratne from the Department of Accounting of the University of Sri Jayawardenepura was of the view that integrated reporting has filled an important vacuum by helping stakeholders understand the integration among different activities of an organisation, including understanding the key value drivers. “So it is important to look at what extent we are using the framework at a managerial decision level,” she added.
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