This post first appeared on the FEI Blog. I wrote it as a guest blogger for Edith Orenstein.
We have been talking about the coming tsunami of regulatory and financial reporting changes facing the CPA profession for awhile now. Here is one more that is on the horizon and probably coming a little faster than we all think.
On Monday, Aug. 2, 2010, the formation of the International Integrated Reporting Committee (IIRC) was announced. The committee is led by Prince Charles, The Prince’s Accounting for Sustainability Project (A4S) and the Global Reporting Initiative (GRI) in an attempt to add a globally accepted set of standards for accounting for sustainability.
The committee’s website states the intent of this new organization as follows:
“The IIRC has been created to respond to the need for a concise, clear, comprehensive and comparable integrated reporting framework structured around the organization’s strategic objectives, its governance and business model and integrating both material financial and non-financial information.
The objectives for an integrated reporting framework are to:
- support the information needs of long-term investors by showing the broader and longer-term consequences of decision-making;
- reflect the interconnections between environmental (see Note A below), social, governance and financial factors in decisions that affect long-term performance and condition, making clear the link between sustainability and economic value;
- provide the necessary framework for environmental (see Note A below) and social factors to be taken into account systematically in reporting and decision-making;
- re-balance performance metrics away from an undue emphasis on short-term financial performance; and
- bring reporting closer to the information used by management to run the business on a day-to-day basis.”
This is clearly another form of global convergence as the European community has led the world in “sustainability reporting.”
Here are a couple of examples of global sustainability reporting:
For the latest on globalization and financial reporting trends, XBRL and more, you will want to be at the new International Business Forum on Oct. 4, 2010 at the Renaissance Mayflower Hotel in Washington, D.C. (a collaborative effort of the Virginia Society of CPAs, the Greater Washington Society of CPAs and the MACPA).
- Note A (Edith Orenstein’s note): See also the front page story by Justin Gillis in the Sunday, Aug. 16 New York Times: In Weather Chaos, A Case for Global Warming
- Note B (Edith Orenstein’s note): See also our Jan. 27 post, SEC Votes to Issue Interpretive Guidance on Climate Change Disclosures
Are you ready for global sustainability reporting?