Author: Richard Sexton, Global Assurance Leader, PwC
Before any revolution, a tipping-point arrives: an inflexion point where a set of apparently separate developments come together and align to make radical change inevitable. In my view, we’re now at such a point in the world of corporate reporting and assurance.
Why do I say this? To explain, let me begin by looking at the current landscape of company information – and then at where today’s developments are taking it.
As we all know, we’re living and working in an increasingly complex and fast-moving world of decisions, risks and opportunities. It’s also a world in which management teams have more and better data and information than ever before with which to manage their businesses and respond to stakeholders’ interests. They’re accessing data from an expanding array of internal and external sources, and synthesising it to develop fresh insight for decision-making.
A growing proportion of the data that management teams are using is now generated outside their company and beyond its control. And this same information is also available to people outside the company including customers, investors, suppliers, owners and society as a whole. They are also drawing on this information to make their own decisions and put management teams under intensifying scrutiny, about issues ranging from strategy to ethics, and from environmental impacts to what factors really drive their decision-making.
Management teams are responding to this scrutiny by using a broader range of data in managing their businesses. The reporting of this information combined with the growing availability of company-related data generated by sources from outside of the company, is putting today’s system of reporting and assurance under increasing strain, pulling it in directions undreamt of when it was developed over 100 years ago.
In my view, all these shifts are now combining to create one irresistible force for change. Because what companies and their stakeholders need today is a new solution to the information challenge: one that provides management teams with information to manage their businesses more effectively and responsibly, while also enabling stakeholders to access the right types of credible information to make decisions with confidence.
What’s more, such a solution is starting to take shape. What we at PwC can see emerging from today’s state of flux is an interdependent network of systems – an “ecosystem” of information and trust – that will be broader, more fluid and more inclusive than any before.
The ecosystem will be powered by technology and fuelled by data. It will be capable of adapting to future advances in technology, managing and sharing multiple sources and types of data and information, and fostering more balanced decision-making that benefits the system as a whole. And – as the image shows – it will include an optimised form of today’s system of financial reporting and assurance.
The evolution of the ecosystem
The transition to the ecosystem is already underway, with many of the required components in place and various participants taking steps to accelerate its development. To find out more about what it’ll mean for your business, download our new point of view paper. I’m sure you’ll find it a riveting read.
Whatever role your business may ultimately play in the ecosystem, its emergence sounds a call to action that you cannot afford to ignore. We think all companies and stakeholders should prepare now by taking steps to plan and secure their future position in it.
- What relationships are important for you to establish or grow? Do you need to establish more permanent bonds?
- Who else is generating data on you and how reliable is it? Can you work to improve the quality of the data and help people put it in context?
- How can you help people to use all the data available on you and your company’s impact more effectively in decision-making?
And there’s no time to lose: early adopters will gain a competitive edge – while laggards will face a battle to catch up. The choice is yours.
Richard Sexton is Vice Chairman; Global Assurance, an appointment he took up on 1 July 2013. In this role, he focuses on further building the PwC network’s global assurance practice with particular emphasis of quality and regulatory matters, trust in the profession, and broader financial markets. Read Richard's full biography.