By Kerry Ace, Finance and Policy Manager, CIPFA
CIPFA’s Central Government Newsletter (December 2016 edition) introduced CIPFA’s work on integrated reporting and considered the benefits its implementation could bring to public sector entities. Integrated reporting (<IR>) enables entities to broaden the conversation about the services they deliver and the value they create, to meet not only short term demands but also long term ones. It also promotes greater trust and confidence among key stakeholders.
Traditional reporting frameworks which focus mainly on historical financial information must be supplemented with relevant and concise information that is fit for modern, multi-dimensional public sector entities faced with tremendous resource constraints and pressures. The complementary approach of integrated thinking and integrated reporting can help public sector entities gain greater understanding of the ways in which they create/maintain value and address those challenges. Integrated reporting can also help enhance governance, transparency and accountability through more holistic disclosures, demonstrating how sustainable outcomes will be delivered for a range of stakeholders over time.
In 2013, the International Integrated Reporting Council (IIRC) published the International <IR> Framework to explain the fundamental concepts of integrated reporting to implementers and other interested parties. It also shares the guiding principles and eight practical content elements for an integrated report. Since then, CIPFA and the IIRC have established the <IR> Public Sector Pioneer Network so that participants from the public sector can explore why and how to implement integrated reporting.
CIPFA will be developing a series of application notes to help public sector implementers successfully undertake their respective <IR> programme. The <IR> Framework includes some requirements that should be applied before an integrated report can be described as being in accordance with the <IR> Framework. The application notes will address some of these requirements, paying particular attention to their applicability in a public sector context.
The application notes are intended to help with disseminating best practice and encourage other public sector entities to embrace a more cohesive approach to public sector management.
In order to gauge support for the types of issues that the application notes should address, CIPFA issued a survey to members of the Public Sector Pioneer Network in February 2017. In particular, we are interested in identifying barriers to implementation in the public sector. After an initial look at the results, perhaps unsurprisingly, a major barrier is limited understanding of integrated thinking and integrated reporting.
We also sought views on the need for guidance on the following themes:
- governance, accountability and transparency
- public sector business models
- compiling information to include in an integrated report
- reporting boundaries for the public sector
- value creation and capital in a public sector context.
We are currently analysing the results of the consultation with a view to developing the first in a series of application notes for public sector entities soon. We have also established an international working group to oversee the process which will convene its first meeting in March 2017.
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