Integrated reporting is one of the new topics on the syllabus of the CMA Part 1 Exam beginning in January 2020. The focus of integrated reporting is reporting more about the company than just the financial statements.
One way of looking at integrated reporting is that it is similar to companies applying the balanced scorecard approach to themselves. In the evaluation of employees, a balanced scorecard approach is when the evaluation consists of more than just the evaluation of the work of the person compared to the financial budget. While there are managers who are able to achieve short-term results, sometimes the way that they act towards their colleagues, customers, and suppliers means that the success does not carry into the long-term. The four traditional perspectives that are assessed under a balanced scorecard evaluation are: learning and growth, business processes, customers, and financial performance.
For companies, the financial statements provide only a limited picture of the health of the company based on what information is required to be reported. Integrated reporting is the process of companies reporting more than just their financial results, but also their impact on stakeholders, the environment, and anyone who comes into contact with the business. The primary purpose of integrated reporting is to explain not just how the company has created value in the past, but how it will continue to create value in the future.
If you are studying for the CMA exams in 2020, you will learn about Integrated Reporting in Part 1, Section A. Whether you are studying for CMA or not, you can learn more about Integrated Reporting here: https://integratedreporting.org/
Integrated reporting is a topic that will continue to become more important and is something that accountants will be working with increasingly in the future. Whether or not you need to study integrated reporting for the 2020 CMA exams, I encourage you to learn more about it, and if you have any experiences with integrated reporting already, you are welcome to share those experiences in the comments.
Brian Hock, CMA, CIA