While the international and local accounting standard-setting organizations focus on improving the existing financial reporting model, the International Integrated Reporting Council (IIRC), a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs, have issued an exposure draft of a proposed framework for corporate reporting about the use of business resources and the corporate business model for value creation over time.
According to the exposure draft, called a Consultation Draft of an International (“IR”) Framework, the objectives of the IR is “to:
Catalyse a more cohesive and efficient approach to corporate reporting that communicates the full range of factors that materially affect the ability of an organization to create value over time, and draws together other reporting strands,
Inform the allocation of financial capital that supports value creation over the short, medium and long term,
Enhance accountability and stewardship with respect to the broad base of capitals (financial, manufactured, intellectual, human, social and relationship, and natural) and promote understanding of the interdependencies between them, (and)
Support integrated thinking, decision-making and actions that focus on the creation of value over the short, medium and long term.” (page 8)
The IR defines value more broadly than merely improving financial performance, it states that value “encompasses other forms of value that the organization creates through the increase, decrease or transformation of the capitals, each of which may ultimately affect financial returns. IR, therefore, considers the broader context of the value created in all the capitals. It is not, however, the purpose of an integrated report to measure the value of an organization or of all the capitals, but rather to provide information that enables the intended report users to assess the ability of the organization to create value over time” (page 16).
The IR provides a principles-based approach for achieving its goal.
Comments on the Consultative Draft are due by July 15, 2013 and can be submitted on the IIRC website at www.theiirc.org., which is also where the Consultative Draft can be downloaded.