Innovative assurance for broader reporting: Is there a better way?

By Mark O’Sullivan, Director of Corporate Reporting at PwC

Twitter: @MsullsMark    LinkedIn: Mark O’Sullivan  

As you’ve read on this blog many times, I firmly believe that sound business decisions – and the disclosures companies make around them – increasingly need to reflect accountability to a wider set of stakeholders. They require a more holistic and integrated view of the outcomes and impacts of everything an organisation does.

All our research and engagement globally demonstrates that many leading organisations worldwide are already pushing the boundaries by innovating and experimenting with more progressive reporting. Too often though this experimentation can be dismissed by external observers as mere spin or marketing, so building stakeholder trust in their reporting during the transition is important, but also challenging.

Why? One reason cited is the existing assurance model – and the concepts underlying it – with its roots in the audit of financial statements, which is a mature, historical and financially-based reporting framework. As a result, it can often act as a barrier against demonstrating the quality of reporting that is broader, more forward-looking, more integrated, and – crucially – still evolving.

Another way to build trust

So, what to do? We believe it’s time to think boldly about a new and different way to build trust in corporate reporting.

Information doesn’t have to be ‘hard’ to be trustworthy – but you do need to know how ‘soft’ it is, and where it’s come from.

So, what if, rather than providing a conclusion on how an organisation’s reporting measures against criteria, we turn the equation round – and instead provide insight that lets people look behind the numbers, so they can decide for themselves the degree of trust they’ll put in the information?

What might be the characteristics of such a model? Based on the application of informed professional judgment, we can envisage a model that is:

• Multi-dimensional – telling a story about the maturity of the organisation’s reporting across several dimensions;
• Information-rich, yet simple – and made more accessible through a visual representation with clear commentary;
• Able to provide insight into what lies behind the numbers – not just whether the numbers are ‘right’ or ‘wrong’ – together with links, when available, to areas where traditional assurance has been obtained; and
• Capable of being applied consistently across different organisations.

All these characteristics point towards a model that’s accessible and understandable ‘at a glance’ – enabling it to remain simple and user-friendly, while being able to handle a vast array of different types of information. And the overall effect would be to enable an organisation to be transparent about where it is on its reporting journey.

Accelerating change

In our recently released thought piece, Inspiring trust through insight, we show how this model might work using the Integrated Reporting (IR) Framework. We believe the thinking is equally applicable to internal reporting: for example, it could be applied to management reporting on the Total Impact Measurement and Management (TIMM) dimensions measuring an organisation's social, environmental, tax and economic impacts. 

One thing is clear: corporate reporting is evolving to be broader, more forward-looking and more integrated. The assurance profession should support and accelerate this journey, and we think the model we’ve developed shows a possible way forward.