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Financial / non-financial reporting frameworks share common principles

The world’s leading financial and non-financial corporate reporting frameworks have the same common foundations, based on the key objectives of transparency and accountability, according to a position paper published by the framework providers. The position paper sets out the seven key principles report preparers should follow for achieving such transparency and accountability.

Participants of the Corporate Reporting Dialogue – an initiative convened by the International Integrated Reporting Council bringing together the major international reporting frameworks – identify transparency and accountability as critical to achieving high quality governance mechanisms and empowerment of stakeholders in modern societies and markets.

In the paper, entitled Understanding the value of transparency and accountability, CDP, the Climate Disclosure Standards Board, the Global Reporting Initiative, the International Accounting Standards Board, the International Integrated Reporting Council, the International Organization for Standardization and the Sustainability Accounting Standards Board set out seven principles of transparency and accountability that they commonly believe are fundamental to corporate reporting: materiality, completeness, accuracy, balance, clarity, comparability and reliability.

The paper states: “These common principles are a reminder that the Dialogue participants have similar expectations from companies in preparing and disclosing information. This implies an alignment at the fundamental level of the frameworks.”

The position paper acknowledges a commonly agreed need for companies to go beyond disclosure and demonstrate accountability to stakeholders, stating, “…transparency needs accountability in order to drive effective behaviour or performance: disclosing in itself is not enough if those holding to account do not have the power to influence the behaviour or performance.”

Participants of the Dialogue have committed to promoting the application of these principles for the wider reporting landscape in future interactions or partnerships, as part of their commitment to providing greater clarity to the reporting landscape on how to use the individual frameworks of Dialogue participants to achieve effective, holistic reporting.

The seven transparency and accountability principles are:

  • Materiality: this regards relevant information that is (capable of) making a difference to the decisions made by users of the information.
  • Completeness: all material matters identified by the organisation for the relevant topic(s) should be reported upon.
  • Accuracy (free from material error): the information reported should be free from material error.
  • Balance (neutral): the information does not have bias, i.e. is not presented in such a way that the probability would be increased that it will be received favourably or unfavourably by the users.
  • Clarity: the information will be understandable and accessible to the users; this includes a certain level of conciseness.
  • Comparability, including consistency: information is reported on the same basis and applying the same methodologies year-on-year. Also, the information enables comparison against other organisations.
  • Reliability: in preparing the information processes and internal controls are in place that ensure the quality of the information and allow for examination of the information reported.
The brief descriptions included should  not be seen as the common definitions by the Dialogue, but serve the purpose of briefly clarifying the principles.

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