Dan Brännström

Personligt om näringsliv och samhälle

Etikett: Rise

High time to re-invent the corporate reporting framework

Please find below my speech from the Sustainable Business, Reporting and Assurance Conference (SUBREA) in Lund on November 16th 2017

Good afternoon everyone! My name is Dan Brännström and I’m Secretary General at FAR – the Institute for the Accountancy Profession in Sweden.

My starting point will be how global market changes really do challenge today’s corporate reporting. I’m talking about ever-increasing expectations on transparency, sustainability and serving the public interest. In addition, there is the increased importance of non-financial information and integrated reporting – one way or the other.

Furthermore, new technology is expected to lead to major changes in Corporate reporting. Real-time reporting and auditing is no longer unreachable science fiction. Bolagsverket, the Swedish Companies Registration Office, and its Nordic equivalents are presently working on a concept they call Smart Government. This project is aiming at submission of financial and other information directly from the companies’ systems to one appointed authority, one-stop-shop if you like. And this shall take place in real-time.

One question in particular comes to mind – will there still be a need for annual reports when this becomes reality?

All this means that the organization and processes for the standard-setting in both reporting and auditing must be thoroughly re-invented. In addition, initiatives from one standard-setter must be better synchronized with others.

However, preparers are struggling on. We can see that the quality of financial reports and other corporate reporting is improving every year. Sweden is on top, maybe even the best. For those of us involved in arranging awards for the best financial statements and sustainability reporting this is quite obvious. The financial statements are however becoming far too voluminous. For the 2016 annual reports the average number of pages increased by 4 from 94 to 98 pages for companies listed at Nasdaq Stockholm. The thickest annual report was, in fact, all of 248 pages!

Is anyone really able to digest such a thick document? Corporate reporting must be readily available for different stakeholders.

All I’ve said so far points to a need for a totally new framework or standard setting, since today’s concept is clearly inadequate. Such a framework should focus on what is really creating value.

I’m talking about a totally new corporate reporting that includes both financial and non-financial information in an integrated manner. All the time with the focus on value-creation. And I guess that you could pick up a lot from the proposed framework for integrated reporting (IIRC).

More and more frequently I hear requests in the market place for a more standardized reporting on sustainability, this in order to make that reporting comparable between companies and hence a better basis for decisions. And I believe sustainability aspects will continue to become more and more important and decisive for all stakeholders.

Well, I’m not sure what you think, but my view is that we can’t go on with this current standard setting where IASB is the standard setter for IFRS and GRI, and up to a thousand others are sources for guidance on sustainability reporting. To me it’s absolutely clear that U2 is right – “we still haven’t found what we’re looking for”.

Furthermore, we have the IIRC for integrated reporting.

If we want corporate reporting to be relevant and to focus on value creation it’s high time to re-invent the standard setting process. And I’m not talking about an add-on to IFRS. My conclusion is that IFRS and other standard-setting must be replaced by a totally new framework.

In doing this, we must aim at making the reporting sufficiently accessible. In this context a paper from Accountancy Europe, including a “Core & More”-concept could be a basis for further development. The concept comprises a summary of business activities – that’s the Core part. In order to meet market demands, this should be prepared in a rather standardized format. It shouldn’t be too voluminous. Maybe 30-40 pages. Everyone can manage to read that.

In addition to this, there is in-depth information available regarding areas such as sustainability, risk, internal control and detailed financial information – that’s the More part.

Obviously, we should apply new technology to – as far as possible – make reporting accessible in real-time. This means, as mentioned earlier, that the annual report will become less significant.

What about audit or assurance on this new, let’s call it integrated corporate reporting?

There are all kinds of possibilities. Anything that is measurable can be subject to audit or assurance. And everything in this world is in fact measurable. I’ve learnt that from working together with technical researchers at the Swedish Research Institute RISE.

At least, the Core-part is the part that ought to be subject to audit or assurance. In doing this the auditor must apply an overall view. That reminds me of the fact that audit is closely related to the word audition – you can almost hear that – which means listening, observing and then setting a grade.

The auditor of tomorrow must be able to make a statement on this kind of integrated corporate reporting. And that will greatly contribute to a reliable, relevant value-creating reporting. In real-time.

Thank you for listening!

6 kommentarer

Allt går att mäta

Vi på FAR har nu svarat på Välfärdsutredningens båda betänkanden.

Första betänkandet Ordning och reda i välfärden handlade ju om vinstbegränsning i välfärden. FAR avstyrkte utredningens förslag av följande skäl:

  • förslaget utgjorde hot mot välfärdsföretagens finansiella stabilitet
  • vinstmöjligheten gjordes beroende av företagets redovisningsprinciper
  • förslaget var ofullständigt och hotade rättssäkerheten för företagen och deras revisorer.

Nu har vi också kommenterat Välfärdsutredningens slutbetänkande Kvalitet i välfärden. I vår respons pekar vi på möjligheten till ny nationell mätmetod för välfärdstjänster, och den ska kunna användas av både offentliga och privata utförare.

För allt går att mäta, ibland är det bara svårt tills någon har gjort det. Att kvalitet i välfärdstjänster kan mätas bekräftas dessutom av internationell forskning. Och den insikten öppnar nya möjligheter.

FAR har under en tid samverkat med olika aktörer kring mätning av hållbarhet och kvalitet. Vi samarbetar bland annat med statliga forskningsinstitutet RISE i ett spännande projekt. Syftet är att skapa förutsättningar för en nationell mätmetod. Ett resultat kan bli ett gemensamt sätt att redovisa kvalitetsindex till nytta för alla aktörer inom välfärdssektorn. När det dessutom görs transparent, och helst i realtid, kan brukare använda det vid val av utförare.

I projektet kommer självklart internationell forskning inom mätmetodik och berörda professioners kompetenser och erfarenheter att tas tillvara.

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Så ska kommunerna mäta kvalitet i välfärden

Vård, skola och omsorg kostar totalt 550 miljarder årligen. Men ännu har ingen kunnat visa en hållbar modell för att mäta effektiviteten i dessa verksamheter. Varje procents effektivitetsvinst innebär 10 000 äldreomsorgsplatser. Och nu skapas ett vattentätt sätt att mäta vad vi får för pengarna.

Så lyder ingressen till FAR:s seminarium 3 juli i Almedalen. Bakgrunden är ett projekt som startats upp av Rise, Vårdföretagarna och oss på FAR. Syftet är att etablera kvalitetsindex för verksamheter inom välfärdssektorn, och vi börjar med pilotprojekt inom hemtjänsten.

Välkommen till FAR i Almedalen och dialogen med bl.a. Ilmar Reepalu kring denna viktiga samhällsfråga!

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