The most important issue in financial and business reporting is to define the boundaries. For instance, what does the entity report on? How is that done? At this point, consider Table 2.4, which summarises the challenges that exist for anyone involved with business reporting, as might be apparent from preceding sections.
|Complexity||Lack of standards|
|Meaningful narrative information||Lack of common terminology|
|Reporting on risk||Definition of ‘materiality'|
|Reporting on executive compensation||Underdeveloped audit methodologies|
|Reporting on corporate governance||Controversial role of the Global Reporting Initiative|
|Auditing for fraud||Competing standard setters|
|Source: Adapted from Integrated Reporting for a Sustainable Strategy, a presentation by Robert G. Eccles and Michael P. Krzus, Rotman School of Management, University of Toronto, 12 May 2010.|
As the table shows, there are two aspects to the prevailing information flow associated with business reporting, these being financial and non-financial. In the first instance, and as is generally understood, are the challenges of increasingly complex audits, whereby evidence of fraud and assorted other risks are sought, in addition to compliance with IFRS. The associated results are reported, as are details related to executive compensation, and, increasingly, corporate governance. Generally speaking, these elements of financial reporting ...