Integrated ReportingIntegrated ReportingCommunicating Stakeholder Value in the 21st CenturyCommunicating Stakeholder Value in the 21st Century

Presented by:Liv Apneseth Watson, Chief Product OfficerXBRL International, Inc.

Concurrent Session: 3:00 – 4:00 p.m.

About XBRL International, Inc. About XBRL International, Inc. • XBRL International, Inc. (XII) is a global organization

whose goal is to transform the efficiency and utility of business reporting through the use of Extensible Business Reporting Language (XBRL).

• XII develops the XBRL standard and promotes its market adoption.

• As a not-for-profit, we are committed to providing an open standard, royalty-free

Today’s Agenda Today’s Agenda

• Global Challenges • What is Integrated Reporting• Responsible Investors• Reporting - Integrated Reporting Framework• The Information Age

The need to innovate and do more with less.The need to innovate and do more with less.

“As global citizens, we face extraordinary challenges: complexity of global trade and supply networks, world population growth expected to reach 9 billion by 2050, diminishing resources, worker safety and fair treatment, human health and safety … At the core of multiple stakeholders’ interests and at the center of such challenges we find the need to more accurately quantify and communicate the sustainability of products.”

The Sustainability Consortium

The Challenges The Challenges

The world has changed.The world has changed.

Business reporting has Business reporting has become increasingly become increasingly complex.complex.

Integrated Reporting Defined“ Integrated Reporting demonstrates the linkages between an organization’s

strategy, governance and financial performance and the social, environmental and economic context within which it operates. By reinforcing

these connections, Integrated Reporting can help business to take more sustainable decisions and enable investors and other stakeholders to

understand how an organization is really performing.”

-- Source: www.theiirc.org

What is Integrated Reporting?• Integrated Reporting brings together material

information about an organization’s strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates.

• It provides a clear and concise representation of how an organization demonstrates stewardship and how it creates and sustains value.

• An Integrated Report should be an organization’s primary reporting vehicle.

• A journey for developing an International Integrated Reporting Framework on the needs of their investors.

• The core objective of the Framework is to guide organizations on communicating the broad set of information needed by investors and other stakeholders to assess the organization’s long-term prospects in a clear, concise, connected and comparable format.

• The Framework will help to elicit consistent reporting by organizations, provide broad parameters for policy-makers and regulators and provide a focus for harmonizing reporting standards.

• The mission of the IIRC (www.theiirc.org) is “To create a globally accepted integrated reporting framework which brings together financial, environmental, social and governance information in a clear, concise, consistent and comparable format” in order to “help business to take more sustainable decisions and enable investors and other stakeholders to understand how an organization is really performing.

Integrated Reporting Discussion Paper• Discussion Paper considers the

rationale behind the move towards Integrated Reporting, offers initial proposals for the development of an International Integrated Reporting Framework and outlines the next steps towards its creation and adoption, including the publication of an Exposure Draft in 2012.

• Its purpose is to prompt input from all those with a stake in improved reporting, including both producers and users of reports.

• Comments should be submitted by: – Wednesday 14th December 2011. E-

mail to: dpresponses@theiirc.org• IIRC Pilot Program

www.theiirc.org.

How is Integrated Reporting different?

Source: www.CorporateRegister.com

International Integrated Reporting Framework - overview

How is Integrated Reporting Different?

Thinking: Disconnected Integrated

Stewardship: Financial capital All forms of capital

Focus: Past, financial Past and future, connected, strategic

Timeframe: Short term Short, medium and long term

Trust: Narrow disclosures Greater transparency

Adaptive: Rule bound Responsive to individual circumstances

Concise: Long and complex Concise and material

Technology enabled:

Paper based Technology enabled

19

Central themesBusiness model & value creation

20

22

Materiality

• The IIRC refers to “the material issues” affecting the organization’s “ability to create and sustain value in the short, medium and longer term.” The concept of materiality is critical to both financial statement disclosure and the reporting of nonfinancial information. In addition, judgments about materiality influence accounting firms’ audit and assurance processes.

Three Major Challenges to Providing an Integrated Assurance Opinion

• (1) developing a global set of credible standards for measuring and reporting nonfinancial information which have the appropriate governmental support, just as is true for accounting standards,

• (2) developing methodologies for providing positive assurance on nonfinancial information, and

• (3) integrating standards and assurance methodologies for financial and nonfinancial information in a way that provide a “true and fair view of an organization’s sustainability.”

Source: CorporateRegister.com showed 3,287 companies publishing a sustainability report in 2010 compared to 830 companies in 2001. Similarly, the number of GRI reporters had grown from 125 in 2001, to 1,864 in 2010.

Responsible InvestmentSignatories to the Principles for Responsible Investment

assets under management of approximately US$ 25 trillion……US$ 25 trillion……

Equator Principles • The Equator Principles (EPs) are a

credit risk management framework for determining, assessing and managing environmental and social risk in project finance transactions.

• Equator Principles Financial Institutions (EPFIs) commit to not providing loans to projects where the borrower will not or is unable to comply with their respective social and environmental policies and procedures that implement the EPs.

Source: www.equator-principles.com/index.php/about-the-equator-principles

The Information Age

XBRL a 2007 Breakthrough Idea!XBRL a 2007 Breakthrough Idea!

Validation

Standardization

XBRL – More Than Just Definitions

CalculationCash = Currency +

Deposits

CalculationCash = Currency +

DepositsFormulas

Cash ≥ 0Formulas

Cash ≥ 0Contexts

US $FY2004

Budgeted

ContextsUS $

FY2004Budgeted

LabelcashCashEquivalentsAndS

hortTermInvestments

LabelcashCashEquivalentsAndS

hortTermInvestments

ReferencesGAAP I.2.(a)Instructions

Ad Hoc disclosures

ReferencesGAAP I.2.(a)Instructions

Ad Hoc disclosures

PresentationCash & Cash Equivalents

PresentationCash & Cash Equivalents

XBRLItemXBRLItemXBRLItemXBRLItemXBRL

<200>XBRL

<200>

PresentationComptant et Comptant

Equivalents

PresentationComptant et Comptant

Equivalents

PresentationGeld & Geld nahe Mittel

PresentationGeld & Geld nahe Mittel

PresentationKas en Geldmiddelen

PresentationKas en Geldmiddelen

Presentation现金与现金等价物

Presentation现金与现金等价物

Presentation現金及び現金等価物

Presentation現金及び現金等価物

PresentationДеньги и их эквиваленты

PresentationДеньги и их эквиваленты

PresentationГроші та їх еквіваленти

PresentationГроші та їх еквіваленти

What does it look like? intelligent, discovery, reusable

“The adoption of eXtensible Business Reporting Language (XBRL) for financial reportingholds great promise as a source of efficiency, transparency, and comparability in the delivery

of financial information.”

“The adoption of eXtensible Business Reporting Language (XBRL) for financial reportingholds great promise as a source of efficiency, transparency, and comparability in the delivery

of financial information.”

SUPPORT

ONE REPORT

ONE DATA SET

Accountants

Attorneys

Other External Advisors

DASHBOARDS & OUTPUT

Other Stakeholders (e.g., Board, Investors,

Regulators)

Accountants

Attorneys

Other External Advisors

Management Teams(CEO, CFO/Finance, Operations, Sales & Marketing, IR)

Access Controls and Permissioning

THE CLOUD

One Integrated Reporting Process

Management Teams(CEO, CFO/Finance, Operations, Sales &

Marketing, IR)

You’re Only as Green as Your Supply Chain

Call to Action!!Call to Action!!

Liv Apneseth WatsonLiv Apneseth Watson

. Liv has over 25 years of experience, in finding innovative

ways to bring together technology, accounting and financial and business reporting.

Working globally with leading market regulators, accounting associations and institutions, Ms. Watson has traveled to over 80 countries presented XBRL to a wide range of audiences from international standards bodies to Fortune 1000 companies and speaks with authority about its benefits, potential applications, and broad adoption.

Liv authored one of IMA's most successful CPE courses "Accounting System Technology for the 21st Century".

She has also published several articles for international publications and journals including Harvard Business Review, Strategic Finance. She also writes a monthly column of financial and business reporting trends for CPA2Biz.

She is the co author and contributor author to several of ‐books including “XBRL for Dummies” and Governance, Risk, and Compliance Handbook published by Wiley.

Member of the Board of Directors, MediaTenorMember of the Board of Directors, Institute of Management Accountants (IMA)Member of IASC Foundation XBRL Advisory CouncilVice Chair of the Institute of Management Accountants XBRL Working GroupXBRL International Steering Committee MemberVice Chair of XBRL International Membership Working GroupPast Vice Chair of XBRL International, Inc.Past Chair of the XBRL US Adoption CommitteePast Vice Chair of the XBRL US JurisdictionAdvisory Board Member – University of Southern IndianaAdvisory Board Member – University of Albany, New YorkAdvisory Board Member - International Journal of Disclosure and Governance Editorial

Chief Product Officer and Founder, XBRL International. Inc.