Business

Business leaders push for integrated reporting

PHILLIMON MHLANGA

Business leaders are pushing for integrated reporting to enhance strategic decision making in a turbulent environment coupled with high inflation and declining demand.

The situation has been worsened by the Covid-19 pandemic.

In Zimbabwe, integrated reporting, which seeks to tie together financial reporting with other types of reporting such as sustainability, social and human, has not really taken off the ground but, some local companies have some concrete plans for that.

The conditions in which businesses are operating are volatile and uncertain.Business as usual no longer exists and the rules of the game are being transformed, business leaders said.

Business leaders said a decision that seemed shrewd today could quickly look misguided as new information becomes available or the context changes.

Non-financial information provides information on a company’s performance in non-monetary terms. When financial measures do not give the full picture, stakeholders turn to non-financial measures.

In other countries, integrated reporting is now a leading practice and is part of listing requirements.

Econet Wireless Zimbabwe’s deputy chief executive officer, Roy Chimanikire, said companies should embed integrated thinking and reporting into an organisation’s activities as this brings significant benefits to the organisation.

He said business was operating in an environment characterised by volatility, uncertainty, complexity, and ambiguity (VUCA).

“We are operating in a VUCA environment and going forward, it requires non-financial information, which may need to be audited as well. This means integrated reporting could drive the businesses forward,” Chimanikire said at the Institute of Chartered Accountants of Zimbabwe (ICAZ) meeting on evaluation of financial and non-financial information in business.

Under the VUCA environment, Chimanikire suggested that companies produce daily reports instead of waiting for weekly or monthly reports for decision making.

The past president of ICAZ also advised accountants to go beyond number crunching saying they should also have a keen interest on what’s happening in other departments.

“As number crunchers, we need to go beyond that [knowing the financials] and need to know what’s happening in human resources, marketing, and other departments. When financial measures do not give the full picture, stakeholders turn to non-financial measures,” Chimanikire said.

Distribution Group Africa (Pvt) Limited’s chief finance officer, Sevious Mushosho, said what was needed in this VUCA environment was a transformed accountant and there is need to upgrade themselves with new skills.

“Evaluation of financial and nonfinancial information of a business allows you to make key business decisions, uncover potential value in a business, and for investors to find potential investment opportunities. You can also evaluate the information to appraise the performance of management in creating value for the stakeholders,”Mushosho said.

Stathis Gould, the director of advocacy at the International Federation of Accountants said businesses must re-think value creation through embracing integrated reporting.

He said accountants must understand value creation beyond the balance sheet.

“Integrated and robust management information leads to better reporting,” Gould said.

“[We] should provide insights on how value is created today and in the future. Integrated thinking, reporting, and sustainability enable value creation in business and resilient business model beyond financial performance and shareholder value.”

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