Integrated reporting: CASL 'cautious'

"Some countries gradually moving into integrated reporting. Sri Lanka is cautious as we don't want to jump into a new concept just because other countries are adopting this. We will develop home grown guidelines that suites our environment," President of CA Sri Lanka, Arjuna Herath told students and academics at the IDeA Night 2014, organised by the Department of Accountancy of the University of Kelaniya.

Herath who was the keynote speaker at the internship felicitation ceremony said that CA Sri Lanka as the national body of accountants and the sole authority to promulgate accounting and auditing standards of the country was doing independent research to determine as to the extent the integrated reporting concept can add value to Sri Lankan corporates, and the implications of adopting the concepts ingrained in Integrated Reporting.

Integrated reporting which is at a pilot stage among many countries across the world.

He said that while the concept was 'valuable' as it focuses in depth on sustainability, generating capital and wealth of a corporate's long term, Sri Lanka is cautious in embracing the concept outright.

"Therefore, we are gradually introducing the concept among the Sri Lankan corporates and as a first step, we included the most appropriate elements in integrated reporting criteria in our annual report awards competition last year, which recognised the best corporate reports produced in the country," he said.

Herath said that a separate segment focusing primarily on integrated reporting will be added at this year's annual reports competition, to promote the concept and support companies which have already fully embraced integrated reporting.

"In Sri Lanka, we don't have many companies which follow the integrated reporting concept.

However, there are a few companies producing integrated reports, and as these companies believe integrated reporting is of value, we want them to embrace it and we will recognise them for it.

We will not make it mandatory for corporates to produce integrated reports and force it on them, but if they independently find the mechanism valuable, we will encourage and recognise their efforts," he said.

Herath said that CA Sri Lanka will use guidelines issued by the International Integrated Reporting Council (IIRC) to draft its own localised criteria in implementing the integrated reporting concept.

He said that CA Sri Lanka will continue to create awareness on the concept by way of seminars and publications.

"There is no doubt that this is a valuable concept as it focuses in depth on long term sustainability of a corporate. Therefore, we will spearhead this initiative, and we will encourage people to look at integrated reporting seriously," he said, adding that integrated reporting will also be included in the new curriculum of CA Sri Lanka which will be launched shortly.

"The new curriculum which will be launched shortly will be revolutionary and will consist of a multitude of important areas, to create more effective partners in business and true catalysts in the progression of the country," Herath said.

IIRC is running a pilot program with 100 companies from across the world, including Sri Lanka which are experimenting with the integrated reporting concept to ascertain if the mechanism is feasible and acceptable by the investing community and other stakeholders, and make changes to the concept if required.

The mortality rate of corporates is far lesser than that of a human being's life span, with the average age of a corporate body being around 40 years, while according to research, by 2000, one-third of companies which existed two decades before the new millennium, failed to exist by 2000.

"New companies collapse often within 10 years, while there are some instances where companies exist for as long as 400 to 700 years. It is obvious that there is something wrong in relation to sustainability of corporates," he said. "We hope that the concept of integrated reporting may direct us to find a solution to this problem as integrated reporting focuses on the organisational strategy, governance and prospects, in the context of its external environment, leading to the creation of value over the short, medium, and long term, helping companies to focus on sustainability and generating financial, human and intellectual capital," Herath said.