IFAC FOCUS AREAS
- Accountability. Now.
- Adoption of International Standards
- Developing the Global Profession
- Global Representation and Advocacy
- Professional Accountants in Business
- Small and Medium Practices
Independent Standard-Setting Boards
The International Auditing and Assurance Standards Board sets high-quality international standards for auditing, assurance, and quality control that strengthen public confidence in the global profession.
The International Accounting Education Standards Board establishes standards, in the area of professional accounting education, that prescribe technical competence and professional skills, values, ethics, and attitudes.
The International Ethics Standards Board for Accountants sets high-quality, internationally appropriate ethics standards for professional accountants, including auditor independence requirements.
The International Public Sector Accounting Standards Board develops standards, guidance, and resources for use by public sector entities around the world for preparation of general purpose financial statements.
|Global Knowledge Gateway||
What Do We Mean by Business Reporting?
Organizations conduct a wide range of reporting, including financial and regulatory reporting; environmental, social, and governance (ESG) reporting (or sustainability reporting); and, increasingly, integrated reporting.
Organizations communicate with their stakeholders about:
- mission, vision, objectives, and strategy;
- governance arrangements and risk management;
- trade-offs between the shorter- and longer-term strategies; and
- financial, social, and environmental performance (how they have fared against their objectives in practice).
(Specific internal reporting issues are addressed in the performance and financial management section of the Gateway.)
Implementation of effective reporting processes is essential for organizations to be able to provide this information. All sections in the business reporting process—the people and processes involved in the preparation, review, approval, audit (when relevant), analysis, and distribution of reports—need to be robust and closely connected to yield high-quality business reports in an efficient and timely manner.
Since the 1970s, there has been significant progress toward the international convergence of financial reporting practices. Today, more than 120 countries use International Financial Reporting Standards (IFRS), including IFRS for Small- and Medium-sized Entities (SMEs), in place of national financial reporting standards. More recently, there has been momentum toward the adoption of integrated reporting. An integrated report is a concise communication of how an organization’s strategy, governance, performance, and prospects, in the context of its external environment, lead to the creation of value over time. Recently, the International Integrated Reporting Council (IIRC) issued the first International Integrated Reporting Framework. IFAC strongly supports the IIRC and has participated in various capacities in the development the Framework.
Why is Business Reporting Important?
Effective and transparent business reporting allows organizations to present a cohesive explanation of their business and helps them engage with internal and external stakeholders, including customers, employees, shareholders, creditors, and regulators.
High-quality business reporting is at the heart of strong and sustainable organizations, financial markets, and economies, as this information is crucial for stakeholders to assess organizational performance and make informed decisions with respect to an organization’s capacity to create and preserve value. (Value in this context is not necessarily limited to monetary value, but can also comprise, for example, social, environmental, or wider economic value.) As organizations fully depend on their stakeholders for sustainable success, it is in their interest to provide them with high-quality reports. For example, effective high-quality reporting reduces the risk for lenders and may lower the cost of capital.
Many organizations are increasingly complex, and have larger economic, environmental, and social footprints. As a result, various stakeholder groups are demanding increased ESG information, as well as greater insight into how these factors affect financial performance and valuations.
High-quality reports also promote better internal decision-making. High-quality information is integral to the successful management of the business, and is one of the major drivers of sustainable organizational success.
Global Perspectives on Business Reporting
According to IFAC’s recent Policy Position Paper, Enhancing Organizational Reporting, high-quality organizational reporting is important for all types of organizations. During the last century, great strides were made in one of the primary sources of information for all key stakeholders—that is, organizations’ financial statements. However, there is growing recognition that it is important to capture and report other, largely non-financial, information. Reporting more broad-based information that is important to, and useful for, stakeholders is in the public interest. The IIRC, and its development of an international integrated reporting framework, is one of these organizations.
The Role of Accountants and the Profession
Professional accountants support organizational reporting by facilitating the identification of the organization’s stakeholder groups, and determining how to effectively engage with each of them; providing detailed knowledge of financial and non-financial reporting standards and guidance; planning, executing, and controlling the preparation of financial and other business reports; and managing and monitoring the efficiency, integrity, and effectiveness of the organization’s financial and non-financial reporting processes, systems, and controls.
The accountancy profession has a great deal to contribute to, and a key role to play in, enhancing organizational reporting. The profession has a long history of involvement in a number of key areas—for example, developing and improving financial reporting processes and controls, and identifying, measuring, and reporting key financial and other information—that are important to the development and implementation of organizational reporting frameworks that go beyond traditional financial reporting.