RegulationAccounting StandardsCIMA, IFAC & PwC combine forces to look at business model reporting

CIMA, IFAC & PwC combine forces to look at business model reporting

Institutes and firms have combined to look at business model reporting and how they can be integrated into financial reports, on behalf of the International Integrated Reporting Council

CIMA, IFAC & PwC combine forces to look at business model reporting

THE PROFESSION has joined forces in investigating financial reports reflection of the business model and how that can be included into future integrated reporting.

CIMA, IFAC and PwC released the background paper: Business Model, which looked at business models and how they are represented in financial reports – on behalf of the International Integrated Reporting Council (IIRC).

The paper found that there is a wide variation in how organisations define their business models and approach to disclosure which can lead to confusion for stakeholders and investors.

It was highlighted that there is a need for a clear, universally-applicable international definition of business models. Currently reporting on business models is inconsistent, incomparable and incomplete because of the lack of consistent guidance and mixed interpretations of what constitutes a business model.

A previous review undertaken by PwC into narrative reporting practices showed that 77% of FTSE 350 companies mention business models in their accounts, but, only 40% provide any “insightful” data about those models, while only 8% integrate business model reporting into strategy and business risks.

PwC director Mark O’Sullivan said: “This information is critical if investors are going to form a view of how they create and sustain value. The pace of technological change and growing complexity of business relationships will only increase the demand for insights into strategy and business models. It will also challenge the relevance, reliability, and timeliness of the information businesses use to backup reporting of their performance and prospects.”

The IIRC’s global consultation on the future of integrated reporting published on 16 April.  

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