South African companies moving to transparent disclosure through integrated reporting

“Integrated reporting is seen as a way of encouraging transparency.” Worldwide there are about 70 companies producing integrated reports.

Deegan points out that the new financial reporting framework is “far-reaching” for companies in South Africa. The process will be an evolving one as it will take some time for organisations to adjust to the new framework, he says.

He says that the quality of reports will vary from industry-to-industry. “Because the reports should focus on items that are material to the company, disclosure will often be driven by matters that are relevant to the industry that the entity operates in.”

He says that companies will also have to consider what material issues contained in the integrated reports have to be assured by auditors. “Again, this will vary from industry-to-industry.” He points to the mining industry as an example. Mining companies may need assurance on the consumption of water and power, he says. On the other hand, organisations in the airline industry may need assurance on the consumption of fuel and their carbon footprint, he explains.

“Auditors will have more complex issues to deal with over the manner in which assurance over the integrated report is provided as financial reporting and frameworks progress. Currently there are only guidelines in place. Therefore, companies have more latitude over what may be assured.”

Deegan says that audit firms will look to getting more experts on board, such as engineers and environmentalists, who can assist in the assurance process. “These non-financial staff will play a vital role in producing the integrated report.”

King will also receive the World Federation of Exchanges (WFE) Award for Excellence on 13 October, in recognition of his work in leading national commissions on corporate governance reform, and for his initiative toward the integrated financial reporting framework.

King says: “To make our economy sustainable we have to relearn everything we have learnt from the past. That means making more from less and ensuring that governance, strategy and sustainability are inseparable.”

South Africa continues to rank high in the World Economic Forum’s annual Global Competitiveness Report and in September 2011 was named the country with the best capital markets regulation.