15 March 2013

IFAC: Principles for Effective Business Reporting Processes

High-quality internal and external reporting is critical for all organisations. High-quality reports promote better internal decision making and high-quality information is also integral to the successful management of any organisation.

Therefore, it is clearly in organisations’ best interest, for their internal decisions and management issues as well as external stakeholder needs, to provide stakeholders with high-quality business reports. The most effective way to accomplish this is to implement effective reporting processes throughout an organisation. When done correctly, effective reporting processes ensure that all internal and external stakeholders receive appropriate high-quality business reports in a timely fashion.

Principles for Effective Business Reporting Processes, new International Good Practice Guidance from the PAIB Committee of the IFAC, helps organisations enhance their reporting processes. This guidance was written for all organisations, regardless of their size or structure, private or public, to address the need for effective reporting processes to produce high-quality reports.

Professional accountants in business are often involved in the implementation—including design, planning, execution, audit, evaluation, and improvement—of their organisations’ reporting processes. The key issues professional accountants in business need to address when implementing effective reporting processes in their organisation are discussed in the guidance.

At the heart of the new guidance are 11 key principles for evaluating and improving business reporting processes. These principles do not prescribe a specific approach but highlight a number of areas for consideration when implementing or improving business reporting processes.

A. Senior management should assume leadership for high-quality reports through effective reporting processes. The governing body should demonstrate commitment to high-quality reports and provide strategic input into, and oversight over, the organisation’s reporting processes.

B. The organisation should determine the various roles, responsibilities, and consequential capabilities in the reporting process, appoint the appropriate personnel, and coordinate collaboration among those involved in the reporting process.

C. The organisation should develop and implement an effective planning and control cycle for its reporting processes in the context of, and in alignment with, its wider planning and control cycles.

D. To ensure the provision of high-quality information, the organisation should regularly engage with its internal and external stakeholders and understand their information needs with regard to past, present, and future activities and results of the organisation.

E. Based on the outcomes of its stakeholder engagement, and taking cost-benefit considerations into account, the organisation should define the content to be included in its reports and also decide on the audience, layout, and timing of its reports.

F. The organisation should have a process in place to ensure that the most appropriate reporting frameworks and standards are selected and that the requirements of those frameworks and standards are aligned with stakeholder information needs.

G. The organisation should determine what information needs to be captured, processed, analysed, and reported, and how to organise the information processes and related systems for effective reporting.

H. The organisation should (a) identify, analyse, and select appropriate communications tools and (b) decide how to optimise distribution of the organisation’s reporting information via the various communications channels.

I. The organisation should ensure that reported information is sufficiently analysed and interpreted before it is provided to internal and external stakeholders.

J. When obtaining internal or external assurance is not a matter of compliance, the organisation should consider voluntary internal or external assurance on its reports and reporting processes.

K. The organisation should regularly evaluate its reporting processes and systems in order to identify and carry out further improvements required for maintaining reporting effectiveness. 

Press release

© IFAC