More responsive corporate reporting?

CIMA’s e-zine (June, 2011) suggests a more responsive corporate reporting system is  need for organisations.  The report by CIMA, PwC and a think-tank called Tomorrow’s Company suggests that an evolving reporting system is necessary to reduce risk within organisations and meet the changing needs to both organisations and society. From from brief reading of the report, a central argument seems to be that the traditional (and incumbent) corporate reporting system is still primarily aimed at the providers of capital. Other elements or reporting have been appended on to this system e.g.  environmental reporting, rather than the full reporting system itself called into question. You may ask why change what is currently there. I’m not sure this is the definite answer, but changes in technology, the business environment and business risk (to mention but a  few) have been arguably more drastic in the past 20 years than the previous 100 years.

The report argues that a new corporate reporting systems needs to have six characteristics, which I summarise below. It argues that if these are incorporated within internal reporting and management processes, the external reporting will likewise improve.

1. Encourage innovation and change.  This should allow a reporting system to respond effectively to shifts in the business environment.
2. Balance judgement and compliance i.e. go beyond compliance reporting solely. What information is needed as a basis for good decisions.
3. Focus more on long-term value, by more integrated management and external reporting.
4. Make reporting accessible, timely and relevant.
5. Give shareholder and investors more information in long term sustainability and value creating capabilities.
6. Ensure some balances and checks are incorporated into the overall reporting system and make someone responsible for this.