Corporate reporting is ‘broken’ and corporate
reporting stakeholders are not fully active in the corporate
reporting system, according to a new study.

The report Tomorrow’s Corporate
examined the overall architecture, culture and
behaviour of those engaged in the corporate reporting process. The
study was conducted by a UK think thank Tomorrow’s Company, PwC and
the Chartered Institute of Management Accountants (CIMA).

At the report launch in London, PwC senior
reporting partner David Phillips said that corporate reporting is
broken and some participants are complacent about the current
‘status quo’. To illustrate this point, the report produced a
jigsaw puzzle diagram that shows the relationship all stakeholders
have with one another and how reporting fits in. It was suggested
that no reporting stakeholder had a holistic view of the

Financial Reporting Council chief executive
Stephen Haddrill said financial reporting has, in some cases,
become focused on disclosing all conceivable risks and not about
the principal risks that are most important to investors and
stakeholders, creating layers of unnecessary complexity.

Realising the growing complexity issue, HSBC’s
chief accounting officer Russell Picot said that the world’s
largest bank had cut down its annual report from 500 pages to 400
pages in the past year.

Major findings

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The study incorporated the views of 118
organisations in 22 countries. It found that:

  • Corporate reporting evolves around data and
    that behavioural responses fail to be acknowledged;
  • Few reporting participants are on the same
    page and it is hard to identify what is in the “public
  • There are several parallel reporting systems
    in use;
  • There seems to be a feel that quantity of
    information prevails over the quality of the information given;
  • There is little interest for change as
    innovation can expose a company to liabilities.

The report calls for a global programme that
recognises different interests of national governments and
stakeholder groups. The roadmap said suggests clear blueprint of
the reporting system should be created for the future, with a
particular focus ‘on the structural, institutional and behavioural
issues which are critical to its effective development’.

They also called for the development of a
global standard for the measurement and reporting of carbon, water
and other scares resources.

Speakers at the launch noted that the future
accountant would need broader skills that would allow it to report
and assess a business’s CSR credentials.


corporate reporting jigsaw