Integrated Reporting Seen as the Way Forward

Forthcoming changes to reporting requirements will require finance functions to combine more accurate financial information with relevant business commentary, according to AutoRek.

The financial controls group is urging finance executives to accelerate their plans to improve information management practices ahead of changes to financial reporting requirements. With the introduction of the Fourth Capital Requirements Directive (CRD IV), Basel III and the Integrated Reporting (IR) Framework in 2014, organisations will experience a vast increase in the complexity, granularity, frequency and volume of reporting required.

In order to comply with new guidelines and prove that businesses have enough capital and liquidity to cover risk levels, finance executives will need to conduct a complete review of existing data gathering and regulatory reporting processes.

This will require liaising with representatives from all key stakeholder departments including finance, risk, compliance, operations and information systems to identify relevant data sources and ensure that information can be extracted accurately, consistently and in a timely manner so that robust reports can be prepared and submitted within tight deadlines.

Finance functions should also use this exercise to rethink how they can combine existing financial information with key performance indicators from other parts of a business to deliver holistic, joined-up structure management information.

“The changing demands of regulators mean that financial reporting needs to be extended beyond traditional regulatory reporting and demonstrate to supervisory bodies that regulatory reports have become a tool for supporting decision making that drives the long-term development of the company,” said Jim Muir, director of AutoRek.

“Not only will firms be required to meet more granular reporting requirements but there will be a renewed focus on proving these reports are an integral part of the organisations governance processes.

“To prepare for the changing nature of financial reporting, organisations need to develop new methods for assimilating the growing volume of information available and supplementing it with additional non-financial information that can be used by company stakeholders.

“Finally, but crucially, there needs to be extraordinary levels of confidence that information being escalated at such speed is reconcilable and auditable so that it can be used to inform all business decisions and meet regulatory requirements.”

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